On March 11, 2026, the United States Trade Representative (USTR) launched a Section 301 investigation into “structural excess capacity and production practices in the manufacturing sector.” Thailand is among the 16 countries and regions named as targets — a development that Japanese companies with Thai manufacturing bases exporting to the US cannot afford to ignore. While additional tariffs are not yet imminent, doing nothing and waiting is the worst approach. Start with understanding your company’s current exposure and gathering information.
1. What Happened — Overview of the Section 301 Investigation
USTR’s Announcement
On March 11, 2026, USTR Representative Jamieson Greer formally announced the launch of a Section 301 investigation titled “Investigation into Structural Excess Capacity and Production Practices in the Manufacturing Sector.”
The 16 countries and regions named as targets are:
China, EU, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, South Korea, Vietnam, Taiwan, Bangladesh, Mexico, Japan, India
Notably, Japan is also included alongside Thailand — something Japanese headquarters should keep in mind.
The Focus: “Structural Excess Capacity”
The investigation targets manufacturing sectors — including steel, semiconductors, EVs, batteries, and solar power — where the USTR believes government subsidies and other policies have enabled structural excess capacity that distorts global markets. If such findings are confirmed, Section 301 allows the USTR to recommend retaliatory measures such as additional tariffs.
Key Schedule
| Timing | Event |
|---|---|
| From March 17, 2026 | Public comment period opens |
| April 15, 2026 | Written comment deadline (23:59 EST) |
| From May 5, 2026 | Public hearings |
| Around July 2026 (est.) | Investigation completion / potential tariff action |
Background: The Supreme Court Ruling and the Shift to Section 301
An important piece of context: in February 2026, the US Supreme Court ruled that the Trump administration’s “reciprocal tariffs” imposed under IEEPA (International Emergency Economic Powers Act) were unlawful. The administration appears to be pivoting to Section 301 as an alternative legal basis to reconstruct its tariff policy.
Currently, a blanket 10% interim tariff under Trade Act Section 122 applies for 150 days (expiring around July 2026). A new round of measures based on the Section 301 investigation is expected to replace it.
2. What Is Section 301? — Explained for Japanese Companies
The Basic Mechanism
Section 301 of the Trade Act of 1974 empowers the USTR to investigate foreign acts, policies, or practices that are unreasonable, discriminatory, or burden US commerce, and to take retaliatory action — most commonly through additional tariffs or import restrictions.
The process generally follows these steps:
- USTR initiates an investigation (this is where we are now)
- Public comments and hearings gather input
- Findings are compiled
- Recommendations are made to the President; tariffs or other measures are imposed
Past Precedent: The 2018 China Section 301 Tariffs
The most significant use of this mechanism was the 2018 US-China trade war. The USTR found that China’s intellectual property practices and forced technology transfers violated Section 301, resulting in tariffs of 7.5–25% on over $300 billion in Chinese goods. Those tariffs remain in effect today and continue to have a significant impact on Japanese companies manufacturing in China for the US market.
What This Means for Japanese SMEs
This investigation directly affects the “make in Thailand, sell to the US” business model. One reason Japanese companies shifted production to Thailand was to reduce tariff risk compared to China. Now that Thailand itself has been named in the investigation, that assumption is being challenged.
3. Concrete Impact on Thai Manufacturing Bases — Sector by Sector
Electronics (HDD, PCB, IC, Semiconductor-Related)
Thailand is one of the world’s leading production hubs for electronic components. Thai exports of electronic parts grew for 22 consecutive months through 2025, and HDD, PCB, and IC exports to the US are substantial.
One critical concern: Thailand’s electronics sector has an average Regional Value Content (RVC) of approximately 22.5% — relatively low. Products that fail to meet origin rules may not qualify as “Made in Thailand,” regardless of where final assembly takes place. Companies with heavy reliance on Chinese-sourced components should pay particular attention.
Additionally, major US firms such as Western Digital and Seagate have HDD production bases in Thailand, and discussions about reshoring (returning production to the US) have emerged, raising the possibility of longer-term supply chain realignment.
Automotive and Auto Parts
Tires in particular face a “double cost” structure, with existing anti-dumping duties now combined with the interim 10% tariff. BOI-promoted EV-related investments also fall under the investigation’s target sectors (EVs and batteries), and their status warrants close monitoring.
Steel and Metal Products
Thailand risks being caught in the spillover from China’s excess capacity problem. Products involving Chinese steel processed in Thailand and exported to the US may be viewed with suspicion as “transshipment” — a point requiring particular caution.
Food Processing
Processed chicken, pet food, and similar products are less directly connected to the “structural excess capacity in manufacturing” focus of this investigation, and their impact may be relatively limited. That said, the possibility of the investigation’s scope expanding cannot be ruled out.
4. Is the “Make in Thailand, Export to the US” Model Over? — Three Scenarios
At this stage, the specific tariff rates and product categories are not yet determined. The following scenarios are presented as analytical frameworks, not forecasts.
Scenario A (Optimistic)
The investigation concludes that Thailand’s manufacturing excess capacity is limited. Additional tariffs are confined to a narrow set of products (e.g., some steel items), with minimal impact on electronics and auto parts.
Scenario B (Middle Path)
Targeted additional tariffs of 10–15% are imposed on specific sectors (steel, some electronics, tires). The University of the Thai Chamber of Commerce has estimated that a 19% tariff could result in export losses of 275 billion baht in 2026 (approximately 1.48% of GDP); the middle scenario could realize a meaningful portion of that loss.
Scenario C (Pessimistic)
High additional tariffs are applied broadly across manufacturing sectors, significantly eroding the competitiveness of Thai production bases for the US market. A “decoupling” dynamic similar to what occurred with China takes shape.
The middle scenario appears the most probable at this point. However, Section 301 investigations are frequently used as political and negotiating leverage, which means significant uncertainty remains.
5. Five Practical Steps to Take Now
① Verify Your HS Codes for Thailand–US Exports
Start by identifying the HS codes for your products exported from Thailand to the US, and mapping the applicable tariff rates — base tariff, the interim 10% under Section 122, and any existing anti-dumping or countervailing duties.
② Calculate Your RVC (Regional Value Content)
Check whether your products meet origin rules for classification as “Made in Thailand.” If your sourcing relies heavily on Chinese components, your RVC may be insufficient to qualify. Knowing your current RVC is foundational to any response strategy.
③ Develop Alternative Supply Chain Scenarios
Conduct a preliminary assessment of alternative production or sourcing options — Vietnam, Indonesia, India — or the potential to expand US-sourced inputs. A “Thailand Plus One” framework may be a useful starting point.
④ Consider Submitting a Public Comment
The April 15, 2026 written comment deadline (23:59 EST) represents an official opportunity to place your company’s position on the record. Participating through JETRO, the Japanese Embassy in Thailand, the Japan-Thai Chamber of Commerce, or other industry bodies is also worth exploring.
Public comments should be submitted to USTR Docket Nos. USTR-2026-0067 / USTR-2026-0068.
⑤ Begin Consulting with Experts and Industry Groups
Initiating consultations with trade law specialists early is advisable. Engaging with industry associations to understand how peer companies are responding is also valuable.
6. Longer-Term Perspective — Options for Supply Chain Restructuring
Thailand Plus One Strategy
Maintaining a Thai base while adding an additional production location is one option gaining attention. Vietnam, Indonesia, and India are all included in the investigation, but depending on the sector and tariff levels, they may still serve as effective diversification destinations.
Leveraging JTEPA (Japan-Thailand Economic Partnership Agreement)
The Japan-Thailand EPA (JTEPA) governs tariff preferences between Japan and Thailand, with limited direct effect on US-bound exports. However, it remains relevant for optimizing business structures and procurement within Thailand.
Thailand’s Evolving Foreign Investment Landscape
The Thai government is reviewing BOI incentives and considering amendments to the Foreign Business Act (FBA) to strengthen foreign investor attraction. The relationship between tariff risk and Thailand’s structural advantages — infrastructure, talent, and supply chain depth — will need to be assessed holistically. For the latest on FBA reform, see “Thailand’s Foreign Business Act: A Major Reform After 25 Years”. For a broader overview of entry structures, see “First Steps into Thailand | Series Part 1”.
Conclusion — Stay Calm, Stay Informed, and Act
The Section 301 investigation was only “initiated” on March 11, 2026. Even in the most aggressive scenario, additional tariffs are unlikely to be imposed before mid-to-late 2026. There is no need to close factories or dramatically alter investment decisions right now.
However, waiting and watching without any action is the worst possible response. What you can do today: identify your product HS codes, understand your current tariff exposure, calculate your RVC, and begin consulting with specialists.
The situation is moving quickly. We plan to provide further analysis at the following milestones:
- After the public comment deadline (April 2026): analysis of comment trends
- After public hearings (May 2026): emerging direction of the investigation
- When results are announced (second half of 2026): detailed breakdown of specific tariff measures
For advice on the impact of the US Section 301 investigation on your Thai manufacturing operations, supply chain strategy review, or public comment submissions — from the perspective of Japanese law, Thai law, and international trade law — please feel free to contact us.
This article is for general informational purposes based on publicly available information as of March 12, 2026, and does not constitute legal advice under Thai law. For specific matters, please consult a Thai-qualified legal professional. Our firm works in collaboration with JTJB International Lawyers’ Thai-qualified attorneys.