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Trade & Policy

Falling U.S. Manufacturing? Must Be Everyone Else’s Fault

• By  Textile Excellence
• March 15, 2026

The U.S. Trade Representative (USTR) on 11 March launched broad Section 301 investigations into structural excess capacity and production in manufacturing sectors across 16 economies, including China, the EU, India, Japan, and Vietnam. The probe focuses on policies driving persistent trade surpluses, underused factories, and state-backed overproduction.

USTR cites sectors such as steel, aluminium, autos, batteries, electronics, machinery, semiconductors, and textiles, warning that U.S. domestic production has fallen behind foreign competitors. Chinese Mainland is flagged for a record US$ 1.2 trillion global trade surplus in 2025, with a US$ 361 billion surplus with the U.S., and capacity utilisation at 74.4%.

The investigations will assess unfair practices including subsidies, suppressed wages, state-owned enterprises, and lax environmental or labour standards. Consultations run 17 March–15 April, with hearings 5–8 May. Remedies include tariffs, import restrictions, or binding agreements. U.S. Trade Representative Jamieson Grier aims to conclude before Section 122 tariffs expire on 24 July.

U.S. blames others, but the problem starts at home

The U.S. government has taken a stance that foreign overproduction and persistent trade surpluses are undermining U.S. manufacturing. But the reality is more complicated.

U.S. manufacturing decline is not solely a victim of foreign trade. High labour costs, aging infrastructure, fragmented supply chains, and strict environmental rules have steadily eroded U.S. competitiveness. Meanwhile, Asian producers have leveraged scale, automation, and efficiency to dominate global supply chains. What the U.S. calls “excess capacity” is often simply production optimised to meet market demand.

U.S. does not have the manufacturing ability to compete with low-cost countries. Tariffs and trade restrictions hurt the American consumer, while doing little to address the underlying structural weaknesses in U.S. factories.

“Section 301 can enforce rules, but it can’t build modern plants, train workers, or fix logistics bottlenecks,” says economist Laura Chen, an expert on global manufacturing competitiveness. “Without domestic investment, these investigations are window dressing.”

The Trump administration aims to replace recently overturned IEEPA tariffs with a broader crackdown. But unless Washington simultaneously tackles automation, workforce skills, and industrial resilience, America may end up fighting a war it can’t win - targeting competitors while letting its own industrial base stagnate.

U.S. manufacturing decline is not solely a victim of foreign trade. High labour costs, aging infrastructure, fragmented supply chains, and strict environmental rules have steadily eroded U.S. competitiveness. Meanwhile, Asian producers have leveraged scale, automation, and efficiency to dominate global supply chains. What the U.S. calls “excess capacity” is often simply production optimised to meet market demand.