PETALING JAYA: The United States’ latest trade investigations are set to heighten tariff risks for developing economies, as Washington revives a long-standing legal tool to pressure trading partners.
International trade expert Abhijit Das said the move reflects growing use of tariffs as leverage, warning that developing nations risk being “held hostage” if they fail to respond firmly.
On March 11, the US launched Section 301(b) probes into 16 economies — including Malaysia, Indonesia, Thailand, Vietnam and Cambodia — to assess whether manufacturing policies linked to excess capacity restrict US commerce.
These investigations, to be undertaken by the US Trade Representative (USTR), could pave the way for tariffs or import restrictions if countries are found to harm American business interests. The process typically takes 12 to 18 months and involves consultations, public hearings and final recommendations.
Section 301, part of the Trade Act of 1974, allows the US to suspend trade concessions or impose duties, though action may be avoided if countries agree to remove the contested measures.
The mechanism has long been contentious, with many World Trade Organization (WTO) members arguing that unilateral US action breaches global trade rules.
The latest move also comes after the US Supreme Court struck down tariffs imposed in April 2025 under emergency powers. Washington has since introduced a temporary 10% tariff under Section 122, which expires after 150 days.
However, continuing this tariff beyond 150 days would require Congressional approval – a difficult prospect at this juncture. Investigations under Section 301-310 would help the US in getting around this problem.
The Section 301 probes could provide a pathway to extend tariffs beyond that limit while increasing leverage in trade negotiations.
Critics argue the US approach — treating persistent trade surpluses as evidence of structural excess capacity — overlooks comparative advantage and risks weak legal grounding.
The investigations are also seen as a tool to extract concessions under Agreements for Reciprocal Trade (ARTs), which some say favour the US.
Many have described the ARTs as effectively unilateral agreements. Tariffs and other restrictions that may be imposed after Section 301 investigations would create further leverage for the US to extract additional concessions from the countries being investigated.
For Malaysia, the benefits from such agreements are now uncertain, especially after earlier reciprocal tariffs were ruled unlawful and offer no protection against potential Section 301 action.
In any event, these ARTs are no longer valid as their very basis – the reduction or exemptions from reciprocal tariffs – is illegal.
“If Cambodia, Indonesia, Malaysia and other developing countries wish to pursue policies in their domestic interest, they need to muster the political will to firmly stand up to the bullying tactics of the US. Failure to do so will keep them hostage to US interests and its strong-arm tariff tactics,” Abhijit said.
