PETALING JAYA: The Office of the United States Trade Representative (USTR) has initiated investigations into several economies, including Malaysia, over concerns about structural excess capacity and production in certain manufacturing sectors.
It said the probe, conducted under Section 301 of the Trade Act of 1974, will examine whether the acts, policies and practices of these economies contribute to excess production that could burden or restrict US commerce.
The investigation covers China, the European Union, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, South Korea, Vietnam, Taiwan, Bangladesh, Mexico, Japan and India.
The office said the move comes as “key trading partners have developed production capacity untethered from the incentives of domestic and global demand”, which it claims leads to overproduction, persistent trade surpluses and unused manufacturing capacity.
On Malaysia specifically, the USTR said evidence of structural excess capacity and production exists for Malaysia through its large or persistent goods trade surpluses.
It said Malaysia maintains a global goods trade surplus led by exports in sectors such as electronic equipment, mineral fuels and oils, machinery, animal and vegetable fats and oils, as well as optical, photo, technical and medical apparatus.
“In 2024, Malaysia’s trade surplus was 7.3% of its GDP, or US$31bil, down from US$47bil in 2023... In 2024, Malaysia maintained a bilateral goods and services trade surplus with the United States of US$16bil.
"Most of this surplus is focused on goods trade, particularly in sectors such as electronics or machinery.
“Evidence suggests that Malaysia has significant excess capacity in its steel sector, which recorded capacity growth of 22% between 2018 and 2022, despite a 25% decline in steel demand during that timeframe,” it said.
The USTR said the inter-agency Section 301 Committee will hold public hearings and is seeking public comments as part of the investigations.
Members of the public may submit written comments or request to testify at the hearings through the USTR electronic portal by April 15.
The development comes after earlier US tariffs introduced under Section 301 were struck down by the US Supreme Court, which ruled that the measures exceeded the authority granted under existing trade laws.
The decision effectively halted the tariffs and prompted a review of the policy.
