US trade chief says tariff caps in trade deals will factor into overcapacity probes

US trade chief says tariff caps in trade deals will factor into overcapacity probes

US Trade Representative Jamieson Greer said Tuesday (local time) that the US government will take into account tariff ceilings agreed upon in trade deals with other countries when conducting investigations into industrial overcapacity that could lead to new tariffs.

Speaking to reporters ahead of a G20 trade ministers' meeting, Greer said he did not want to get ahead of the findings but made clear that existing trade agreements would weigh on any conclusions. "I don't want to get ahead of the report and the actions that might be proposed, but we do value those agreements and will certainly take that into account when we look at the conclusions of the report," he said, according to Reuters.

The US government is conducting an investigation under Section 301 of the Trade Act, focusing on the excess production capacity of major trading partners, with tariffs a possible outcome. While the probe covers major trading partners broadly, China is the primary target.

Countermeasures against overcapacity also came up at a G20 finance ministers' meeting held in the United States earlier this month, where every G20 member except China backed the US policy direction. The EU has been particularly aligned with Washington, driven by concerns that cheap Chinese imports flooding its market are damaging domestic industries.

Greer's remarks can be seen as an effort to broaden the coalition against Chinese overcapacity by signaling that countries with trade agreements with the US — unlike China — could see the impact of any tariff measures softened. In that sense, the overcapacity probe, with additional tariffs in view, amounts to yet another source of trade pressure on Beijing.

Earlier, the US launched Section 301 investigations into 60 economies over inadequate enforcement of bans on goods made with forced labor, proposing additional tariffs of 10.0 to 12.5 percent. Those proposals are also widely interpreted as targeting China above all others.