Indo-Pacific Countries Respond To USTR’s Section 301 Investigations
Countries listed in the United States Trade Representative’s (USTR) initial tranches of Section 301 investigations after the Supreme Court struck down President Donald Trump’s use of tariffs under the International Emergency Economic Powers Act (IEEPA) to impose tariffs are still assessing how these investigations will impact them and what the best way forward will be.
This report consolidates inputs from the impacted markets in the Indo-Pacific and offers preliminary assessments, reflecting early government and market reactions, given that this is just the launch of investigations. The ultimate impact will depend significantly on whether any Section 301 action is taken and the extent that new tariffs are imposed.
At this stage, BGA has focused on capturing immediate policy signals, political positioning and economic risk perceptions in the markets where the company operates. BGA will continue to monitor developments closely as the situation evolves. Clients with specific exposure or concerns are encouraged to reach out directly to our country teams, and they will proactively share updates as our analysis sharpens, particularly where developments intersect with your core commercial and strategic interests.
The public comment period for the second investigation on forced labor opened March 13, with a deadline of April 15. Public hearings for this investigation will start April 28. The public comment period docket for both investigations is already open, with a deadline of April 15. Public hearings for the overcapacity investigation begin May 5. Comments on the use of forced labor can be submitted and can be found here. Companies interested to participate in the hearing should submit written comments, requests to appear as well as a summary of the testimony by April 15.
Southeast Asia
Cambodia
For Cambodia, the main potential exposure is not necessarily higher tariffs but scrutiny related to bypassing import restrictions or transshipment, particularly from China. If the United States suspected that products from other countries are routed through Cambodia to bypass existing tariffs, Washington could impose stricter rule-of-origin requirements, a higher domestic value-added threshold and stronger documentation and verification procedures. These measures would primarily focus on compliance, forced labor and supply chain transparency. A relevant precedent is the Section 201 investigation on solar panel imports that started in April 2024. It eventually triggered broader, industry-wide and country-specific tariffs of up to 3,521 percent on Cambodia solar panel exports in April 2025, effectively causing Cambodia’s $830 million (2024) solar export industry to collapse.
Cambodia’s tariff exposure remains governed by the U.S.-Cambodia reciprocal trade agreement (ART) of October 26, under which the tariff ceiling was reduced to 19 percent. As of now, the Cambodian government has not issued an official statement, and no formal investigation request has been received. Phnom Penh is ready to engage constructively with the USTR to clarify compliance standards and safeguard continued market access. Cambodia has relatively strong compliance credentials, allows international monitoring through the International Labor Organization’s (ILO) Better Factories Cambodia program and has ratified numerous ILO conventions. Although the garment industry imports raw materials, mainly from China, sourcing does not involve Xinjiang, ensuring compliance with buyers’ strict requirements regarding forced labor and supply chain transparency.
Indonesia
Indonesia’s reaction to the Section 301 investigations has been muted, with no official response from the administration of President Prabowo Subianto yet. This is consistent with its broader posture since the U.S. Supreme Court’s ruling striking down Trump’s use of tariffs using emergency powers — a “wait-and-see” approach that prioritizes preserving what was gained from the ART over reopening what was already a difficult negotiation.
On excess capacity, Indonesia faces exposure across nickel-derived steel, electric vehicle batteries, cement, electrical machinery and chemicals. More fundamentally, the investigation strikes at the heart of Indonesia’s state-led downstreaming strategy, anchored in a ban on raw nickel exports and extended — ambitiously, if unevenly — to other commodities. That Chinese firms control an estimated 75 percent of Indonesia’s nickel refining capacity sharpens Washington’s concern. USTR views Indonesia less as an independent actor and more as a conduit for Chinese overcapacity circumventing existing U.S. tariffs.
Moreover, Indonesia has no meaningful legislation prohibiting imports of goods produced with forced labor. Reform in this area is unlikely in the near term, leaving it exposed on the second tranche as well.
Nevertheless, Jakarta is unlikely to oppose the 301 investigation too much if it is merely meant to restore the U.S. tariffs’ initial baseline on a permanent basis. The administration has accepted tariffs as an immovable feature of Trump’s trade strategy. Having already signed an ART at 19 percent, it has little incentive to contest the broader direction of U.S. trade policy, particularly if doing so risks unraveling the zero-tariff exemptions it secured for palm oil and other sensitive commodities.
Malaysia
Malaysian Trade Minister Johari Abdul Ghani informed media sources March 14 that Malaysia will seek to explain its case to USTR concerning allegations of excess industrial capacity and forced labor as raised in the Section 301 investigations implicating Malaysia. Johari, in a separate statement March 15, said the ART signed with the United States is no longer applicable after the U.S. Supreme Court overturned most of the broad tariff measures introduced by the Trump administration. This development comes as USTR recently reaffirmed its commitment to the ART framework and signaled its expectation that Malaysia would continue to uphold the agreement’s commitments.
Malaysia views the United States as one of its largest export destinations, particularly for electronics and electrical products, including semiconductors, machinery and electrical equipment, in which the country plays a significant role within global supply chains. Other industries, such as petroleum products, solar panels, steel and downstream metal manufacturing, may also face scrutiny under the investigation. This is due in part to Malaysia’s close trade links with China, which has positioned the country as an important manufacturing and supply chain hub for Chinese-linked industries.
At the same time, Malaysia has been strengthening its domestic framework to address forced labor risks. Amendments to labor laws, stronger enforcement and improved supply chain traceability in sectors such as palm oil, electronics and manufacturing have been witnessed in recent years. Malaysia does not yet have a comprehensive import-specific prohibition on goods produced with forced labor. However, forced labor is prohibited domestically under several laws, including Article 6 of the Federal Constitution, Section 374 of the Penal Code, the Employment Act 1955 and the Anti-Trafficking in Persons and Anti-Smuggling of Migrants Act.
Under the ART, Malaysia had committed to introducing a ban on imports of goods produced wholly or partly with forced labor within two years of the agreement’s entry into force, which would have accelerated related regulatory reforms. However, uncertainty over the validity of the ART and the prospect of potential tariffs arising from the Section 301 investigations into forced labor raise questions regarding the continued relevance of such a provision. Malaysia is expected to reengage with the United States to discuss on how to proceed with the trade agreement in the coming months, taking into consideration how the Malaysia-specific Section 301 investigations would pan out.
Philippines
The Philippines’ only response so far has come from Department of Trade and Industry Undersecretary Ceferino Rodolfo, who welcomed the probe as an opportunity to clarify the country’s policies. He expressed confidence that, with more information and engagement with the United States, the Philippines can demonstrate why it should not be included in the investigation.
Rodolfo emphasized that the country’s domestic labor policies remain aligned with efforts to curb forced labor, citing compliance with the U.S.-Philippines Trade and Investment Framework Agreement, under which both countries pledged to recognize the significance of “working toward the observance and promotion of mutually recognized workers’ rights” for their respective economic welfare. He also clarified that the Philippines’ inclusion in the second Section 301 investigation does not accuse the country of using forced labor. Instead, it focuses on alleged gaps in preventing imports of products made under such conditions.
Rodolfo noted that the Philippines was exempt from USTR’s initial Section 301 investigation on structural excess capacity and production in manufacturing, adding that most of the country’s neighbors, such as Cambodia, Indonesia, Malaysia, Thailand and Vietnam, were listed in both investigations.
Singapore
Singapore’s semiconductor industry may come under increased scrutiny because of the U.S. Section 301 investigations into excess capacity. Singapore occupies a pivotal position in the global semiconductor supply chain, producing roughly one in 10 chips worldwide and about 20 percent of global semiconductor equipment output, with the sector contributing close to 6 percent of GDP. Notably, much of Singapore’s semiconductor production is concentrated on mature-node chips, which serve broad end-use markets including consumer appliances, automotive systems and industrial equipment. Singapore’s direct exports to the United States remain relatively contained, with semiconductors accounting for approximately 1.6 percent of total Singapore domestic exports to the United States, while other electronics and semiconductor equipment represent a further 15 percent.
The Ministry of Trade and Industry (MTI) issued a statement March 12 contesting two claims in the USTR’s Federal Register Notice. MTI cited U.S. Bureau of Economic Analysis data showing that Singapore runs a net deficit of approximately US$27 billion with the United States, comprising a goods deficit of US$1.7 billion and a services deficit of US$25.1 billion. This directly contradicts USTR’s assertion of a bilateral surplus of a similar magnitude.
On the issue of industrial capacity, MTI rejected the suggestion that Singapore has been expanding manufacturing capacity amid declining occupancy rates of industrial space. MTI noted that industrial occupancy remains healthy at around 90 percent and has been consistently maintained at that level. MTI further highlighted that, given land scarcity, the total area allocated for industrial use has in fact decreased over time. MTI has submitted this data to USTR and will be engaging it to seek clarification.
Thailand
Following the U.S. Section 301 notification, Thailand’s Ministry of Commerce has identified automotive and auto parts, machinery and rubber products as sectors likely to face scrutiny for excess production capacity. The Federation of Thai Industries also expects electronics and advanced technology products, including hard disk drives, printed circuit boards, smart electronics, chips and semiconductors, to come under review due to rapid export growth as Thailand’s trade surplus with the United States increased year-on-year from $45 billion to $51 billion last year.
A task force led by Ministry of Commerce Permanent Secretary Vuttikrai Leewiraphan has been set up to assess the impact and prepare Thailand’s response. Thailand will submit written comments by April 15 and may participate in public hearings in Washington from May 5-8 ahead of a seven-day rebuttal period.
The government emphasizes that Thailand differs from other economies under review because it has not been cited for currency manipulation or direct export subsidies. Bangkok plans to clarify to USTR that a significant share of the surplus originates from U.S. companies operating production bases in Thailand and exporting back to the United States.
Thailand’s exposure reflects its growing bilateral goods trade surplus with the United States, which has prompted Thailand to rise from 11th to seventh among countries with the largest surpluses. The surge is partly driven by exporters accelerating shipments ahead of possible tariff measures, combined with strong global demand for technology-related products produced in Thailand within multinational supply chains.
Vietnam
The current Section 301investigation differs significantly from the earlier case brought against Vietnam. It targets multiple countries, not Vietnam alone, and is driven by the broader objective of restoring the “reciprocal tariffs” previously proposed by Trump. The investigation may focus on specific product categories that contribute the most to the trade imbalance between Vietnam and the United States, such as electronics, textiles and garments, seafood and wooden furniture.
Against this backdrop, the Vietnamese government has not rushed to respond to the announcement about Section 301 investigations being brought against 60 countries. Vietnamese officials are carefully assessing potential risks and the current geopolitical context, closely monitoring how other countries, particularly regional peers, are responding. In parallel, Vietnam continues efforts to advance a bilateral trade agreement with the United States in the near term. Officials expect that, if and when such an agreement is concluded, it would be marked by a top-level visit from either side to witness its implementation.
Earlier, the United States in 2021 concluded Section 301 investigations into Vietnam’s currency valuation and timber trade, which had been initiated by the Trump administration. Following an agreement between the U.S. Treasury and the State Bank of Vietnam, the U.S. determined that no immediate tariffs or punitive trade measures were necessary, because currency-related concerns were deemed resolved. This is Vietnam’s prior experience engaging with U.S. Section 301 investigations.
Northeast Asia
China
China is among the economies named in USTR’s latest Section 301 investigation, with potential scrutiny covering sectors including steel, electric vehicles, batteries, solar panels, semiconductors, shipbuilding and chemicals. The investigations against China will investigate whether the acts, policies and practices underpinning these sectors, including state financing mechanisms, procurement guidance and Five-Year Plan output targets, constitute actionable “unreasonable or discriminatory” practices under U.S. trade law remains to be determined through the formal investigation process. China’s bilateral goods surplus with the United States stood at approximately $280 billion in 2025, which USTR may cite as evidence of structural imbalance. However, Beijing disputes this characterization. Unlike Korea, Taiwan or Japan, China has no ART that could provide a framework for resolving concerns, and excess capacity was not addressed in the November 2025 Busan tariff truce between the top leaders of China and the United States. Beijing has rejected the investigation’s premise, with Ministry of Foreign Affairs spokesperson Guo Jiakun noting that “both sides should resolve relevant issues through consultation on the basis of equality, respect and mutual benefit.” The Ministry of Commerce has urged the United States to “return to the correct path of resolving issues through dialogue and consultation.” The investigation’s timing is particularly consequential, arriving days before preparatory trade talks in Paris and less than three weeks before Trump’s planned state visit to Beijing from March 31 to April 2. Rather than derailing the summit, the probe will more likely function as a negotiating instrument, with Washington seeking leverage on agricultural purchases, rare earth commitments and industrial policy concessions. Beijing meanwhile pushes for assurances that the investigation will not result in new tariffs while the current bilateral truce remains in effect through November 2026.
Japan
USTR has launched new investigations under Section 301 targeting multiple countries, including Japan. The investigations primarily focus on two issues: excess capacity in manufacturing and forced labor. In the investigation concerning excess manufacturing capacity, Japan was identified as a target. USTR explained that Japan was included because there are “signs of structural excess capacity and overproduction.” As examples, it pointed to sectors such as automobiles and auto parts as well as optical, photographic, technical and medical equipment, areas in which Japan records trade surpluses with the United States and in global markets.
The Japanese government has urged the United States to ensure that any new tariff measures do not result in conditions less favorable than those established under the existing U.S.-Japan trade agreement. While the United States has indicated that existing agreements may be taken into consideration, it has not committed to tariff exemptions or similar measures.
Korea
The presidential office announced March 12 that it will actively consult with Washington to ensure the balance of interests secured under the existing bilateral tariff agreement is not undermined and that Korea does not receive less favorable treatment. Seoul views the investigation not as a retaliatory measure targeting Korea, but as an administrative step to restore previously agreed tariff rates following the U.S. Supreme Court ruling.
Deputy Foreign Minister for Economic Affairs Chung Eui-hye met the same day with U.S. Assistant Secretary of State for East Asian and Pacific Affairs Michael DeSombre and called for a fair probe while outlining progress in implementing investment commitments, including the recent passage of a special act governing Korean investment in the United States.
The two countries agreed last November to reduce Korea’s reciprocal and auto tariffs to 15 percent from 25 percent and grant most-favored-nation treatment for semiconductors and pharmaceuticals. The deal also included a $350 billion investment package, while the issue of excess capacity was not addressed.
Key sensitivities include automobiles, semiconductors, steel and shipbuilding. Seoul maintains that automobiles and semiconductors fall within the framework of the tariff agreement and are therefore unrelated to the investigation. Prime Minister Kim Min-seok met with Vice President JD Vance along with USTR Jamieson Greer at the White House on March 14, where they discussed Washington’s recent trade measures. The prime minister also met briefly with Trump.
Taiwan
Taiwan is named in both USTR 301 investigations announced the past week. Semiconductors, electronics, machine tools and machinery — core pillars of Taiwan’s export sector — are subject to the excess capacity manufacturing investigation. The forced labor investigation may have less impact on Taiwan, and the economic minister said the past forced labor allegation involving Taiwanese companies were unique cases and the government has taken measures to counter labor abuses. In September 2025, U.S. Customs accused Taiwan’s Giant Group of suspected forced labor, restricting its exports to the United States. The Taiwanese government has so far adopted a cautious tone toward the Section 301 investigations without announcing specific countermeasures. Officials have instead emphasized ongoing communication with U.S. counterparts and affected industries, stressing Taiwan will aim to preserve the relative advantages and preferential treatment secured under its ART with Washington.
According to information obtained by BGA, Taiwan’s cautious stance reflects lessons from earlier reciprocal tariff negotiations, in which countries that presented proposals early did not necessarily secure better terms. As a result, Taiwan aims to avoid a proactive posture while maintaining close communication with Washington to preserve mutual trust. However, this approach may draw criticism from opposition parties. The ART and the investment memorandum of understanding (MOU) have yet to be submitted to the Legislative Yuan, because the final text may need to be adjusted following the conclusion of the U.S. investigation. This delay could invite criticism over transparency and add uncertainty to their eventual legislative approval.
Vice Premier and chief negotiator Cheng Li-chun stressed that both Taiwan and the United States seek to consolidate the outcomes of negotiations under the ART and the Taiwan-U.S. Investment Cooperation MOU. She also noted that several issues currently under U.S. investigation — including forced labor — were already addressed during the ART negotiations, and she expressed confidence that the investigation’s conclusions will reflect these earlier understandings. While Taipei aims to consolidate existing agreements and stabilize market expectations, officials have indicated that if a shift to Section 301 alters the terms, Taiwan will compare its outcomes against those secured by Japan and Korea to ensure at least equivalent treatment and maintain its relative competitiveness.
The Pacific
Australia
The government has not responded to the first Section 301 investigation targeting Australia. Australia is a strong importer of telecommunications equipment, manufactured goods (such as toys, clothes and cars) from countries at risk of being charged with using forced labor. This applies particularly to China, which is Australia’s number-one trading partner. Australia also imports 90 percent of its solar panels from China. Australia addresses forced labor in supply chains primarily through the Modern Slavery Act, which requires large businesses report on their risks and actions. However, the act has been criticized by Australia’s anti-slavery commissioner as effectively voluntary and not adequately covering products sold on e-commerce shopping platforms.
The government recently concluded a public consultation to strengthen the act. The anti-slavery commissioner recommended mandatory risk-based modern slavery due diligence obligation for companies covered under the act and a mechanism for the anti-slavery commissioner to declare that a product, service or industry carries a high risk of modern slavery and require entities to regard declarations in their obligations under the act. Criminal penalties for forced labor are covered under Division 270 of the Criminal Code. They can apply when the conduct occurred in Australia or when the conduct occurred outside Australia, but the offender was an Australian citizen, resident or corporation.
In the meantime, Section 301 investigations targeting Australia’s key export partners will be watched especially since Australia is a strong supplier of iron ore, liquefied natural gas and coal to Asia.
South Asia
Bangladesh
Bangladesh’s ready-made garment sector will likely come under investigation because it is the country’s major export sector. The Bangladesh Garment Manufacturers and Exporters Association have expressed concern about the Section 301 investigations, but the government has not issued a reaction yet. The ready-made garment sector receives preferential treatment from the government in terms of export incentives and bond market facilities.
Bangladesh recently updated its labor laws, prohibiting child labor and improving working conditions in factories and in other sectors of the economy. Having signed an agreement on reciprocal trade February 9, the new Bangladeshi government is still exploring how the investigations will now square up with the agreement.
India
In India, sectors under scrutiny may include solar modules, petrochemicals and steel, which USTR identifies as industries in which manufacturing capacity exceeds domestic demand. The investigation flags textiles, health-related goods, construction materials and automotive products as sectors with U.S. trade surpluses, making them candidates for closer scrutiny of links between industrial policy support and export growth.
The United States is India’s largest export market, with goods exports worth $86.5 billion in 2025, led by electronics, pharmaceuticals, machinery, petroleum products and engineering products. Government support includes India’s $26 billion Production-Linked Incentive scheme, which promotes domestic manufacturing in 14 sectors including electronics, pharmaceuticals, automobiles and renewable energy equipment.
Excess capacity has not been a central issue in ongoing bilateral trade discussions, which have focused more on tariff reductions and increasing long‑term U.S. goods purchases to bridge the $58 billion trade deficit. However, Washington has taken sector-specific trade actions, including steep countervailing duties on solar module imports, reflecting concerns over subsidies and industrial policy.
The government of India has not issued a formal public response and is adopting a “wait-and-” approach while assessing implications for engagement with the United States. A previous Section 301 Investigation into India’s Equalization Levy also known as “Google tax”—led India to withdraw the tax in 2025, suggesting the current probe could influence bilateral trade discussions. USTR is investigating forced labor concerns in India for the first time and may widen compliance checks for labor‑intensive, informal sectors.
BGA will follow up with more updates on this developing situation. If you have any questions or comments, please contact BGA Managing Director for Global Trade and Economics Nydia Ngiow, Head of Research Murray Hiebert or the respective country lead.
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