What happened
The United States has launched an investigation into China and 15 other economies over excess manufacturing capacity. The US Trade Representative, Jamieson Greer, has made addressing structural excess capacity a priority, citing its harmful effects on US industry. The investigation, which began on March 11, is examining whether government policies and practices that contribute to excess production are unreasonable or discriminatory and burden US commerce.
Industries under review include automobiles, batteries, semiconductors, and steel, among others. The US is concerned that persistent excess production abroad can displace US manufacturing and discourage new investment in American factories. According to a report by the Organisation for Economic Co-operation and Development (OECD), Chinese industrial firms received significantly more government support than firms based in OECD economies between 2005 and 2024.
The US has also agreed on a new framework with participating economies to take joint action against excess steelmaking capacity and market-distorting subsidies. The US Trade Representative has announced that countermeasures against excess manufacturing are expected to be announced within weeks, although the form of these measures has not been disclosed.
