'U.S. USTR to Announce Overcapacity Investigation Results Within Weeks... Criticizes Chinese EVs, Japanese Zombie Firms'

Vietnam’s Lack of Domestic Consumption Cited
"Wage Increases Are Needed"

No Direct Mention of South Korea, But Included Among 16 Countries

"Overcapacity Is a Separate Issue" Despite China Trade Agreement

The administration of U.S. President Donald Trump announced that it plans to release the results of an investigation into additional trade measures, launched in March against sixteen major trading partners including South Korea, over the issue of manufacturing overcapacity, "within a few weeks."

Jamison Greer, United States Trade Representative (USTR), met with outlets such as Japan’s Nihon Keizai Shimbun (Nikkei) in Milwaukee, Wisconsin on the 1st (local time). He stated, "We will not quietly accept products that are overproduced," and declared, "The United States will take action." He went on to say that the results of the investigation into the overcapacity issue would be announced within a few weeks.

Jamison Greer, United States Trade Representative (USTR), is delivering a speech at the G20 Trade Ministers' Meeting held in Milwaukee, Wisconsin, on the 1st (local time). Photo by AP Yonhap News

On March 11, the USTR announced it had launched an investigation under Section 301 of U.S. trade law into manufacturing overcapacity issues targeting sixteen major trading partners, including South Korea, China, Japan, the European Union (EU), and Taiwan. This is separate from the forced labor tariffs decided under the same law in July. At that time, the United States imposed additional tariffs of 10% or 12.5% on 60 countries and regions, including China, citing insufficient measures to counter forced labor.

If the United States imposes additional tariffs due to overcapacity, there is a possibility that China may respond with retaliation. Last month, the U.S. and China agreed to extend the "trade war truce" by two months and to reduce tariffs on "non-sensitive items" such as toys following a summit meeting. Greer stated that “the majority of tariffs currently imposed on China for various reasons, including unfair trade and national security, will remain in place,” making it clear that the truce and the response to overcapacity are separate issues.

He also commented that at international meetings such as the Group of Twenty (G20) Trade Ministers' Meeting—which addressed overcapacity as an agenda item—“China generally takes a defensive posture because it is aware that it is the source of market distortion.” As the chair of the G20 Trade Ministers' Meeting, which ran from August 30, Greer led discussions on how to address overcapacity in sectors such as steel and on forced labor issues. Li Chenggang, a key figure in U.S.-China trade negotiations, attended the meeting as China’s representative.

Greer directly mentioned specific cases involving countries such as China, Japan, and Vietnam. He pointed to excessive price competition in China’s electric vehicle (EV) market as an example, noting that China is experiencing what is known locally as the “Neijuan” phenomenon (intense internal competition). He remarked, “China does acknowledge to some extent that there is a problem of overcapacity,” and added, “China calls it ‘Neijuan,’ but the fundamental issue is overcapacity.”

Regarding Vietnam, Greer said, “A lack of domestic consumption is the problem,” explaining that “workers cannot afford to buy the goods produced in their own country and thus must rely on exports.” He argued that domestic demand should be increased through the protection of workers’ rights and wage increases. Speaking of Japan, he criticized the continued existence of so-called zombie companies that should go bankrupt, saying, “Various factors lead to overcapacity, and ultimately, this hurts workers in Milwaukee.”

The issue of South Korea was not addressed directly on this day, but because South Korea is included on the list of sixteen countries, both the government and industry are on alert. In a related hearing hosted by USTR in May, the Korean government emphasized that Korean industries operate in accordance with market economy principles, and that companies in oversupplied sectors such as steel and petrochemicals are undergoing voluntary, company-led restructuring. The government also stressed that this is fundamentally different from the type of state-led overcapacity seen in China.

This content was produced with the assistance of AI translation services.