US-China trade war escalates as new probes target technology manufacturing
Section 301 investigations into semiconductors, autos and batteries risk supply chain disruptions as Beijing warns of countermeasures
The United States has launched sweeping Section 301 investigations targeting China's manufacturing overcapacity, escalating trade tensions between the world's two largest economies and sending fresh uncertainty through global technology supply chains.
The Office of the US Trade Representative initiated probes on March 11-12 that focus on structural excess capacity in manufacturing sectors spanning semiconductors, automobiles, batteries, steel, aluminum, chemicals, electronics, solar modules, ships and robotics across 16 economies, with China at the center of the inquiry. A separate investigation addresses alleged forced labor practices in 60 countries.
China has vehemently condemned the investigations, labeling them "political manipulation" and warning of potential countermeasures under its revised Foreign Trade Law, which came into effect on March 1, 2026. The updated law significantly expands Beijing's legal toolkit for implementing retaliatory trade restrictions against foreign entities that disrupt "normal transactions" with Chinese companies.
"China reserves the right to take all necessary measures to defend its interests," the country's Commerce Ministry stated after high-level economic and trade consultations in Paris on March 15-16, where Vice Premier He Lifeng formally objected to the US investigations.
The investigations follow a February 20 Supreme Court decision that invalidated previous tariffs imposed under the International Emergency Economic Powers Act. In response, President Trump introduced a temporary 10% global tariff under Section 122 that will remain in effect until July 24, 2026, while the USTR conducts its new investigations.
Technology manufacturers face a particularly challenging tariff environment. Batteries and battery energy storage systems imported from China currently face an 82% total tariff, according to industry data. US battery imports have fallen to a five-year low, with Chinese imports reaching their lowest point since 2021. The Department of Commerce imposed a 205% tariff on Chinese active anode materials used in lithium-ion batteries on February 17.
The semiconductor sector remains under pressure. NVIDIA was permitted to sell its H200 AI processor to Chinese customers in January 2026 under stringent conditions, including a 25% tariff on advanced computing chips. New US tariffs on semiconductors from China are scheduled to begin on June 23, 2027, starting at 0% and increasing after 18 months.
Automobiles face 25% tariffs on autos and auto parts imposed under Section 232 in March 2025, which remain applicable. The average effective US tariff rate has climbed to 10.3% through January 2026, according to tariff tracking data.
Public comments on the investigations are due by April 15, with forced labor hearings scheduled for April 28 and overcapacity investigations set for May 5-8. The USTR aims to conclude the investigations and be prepared to impose new tariffs by approximately July 24, according to legal analysis from White & Case.
A planned visit by President Trump to Beijing at the end of March, which could have addressed trade tensions, has been delayed due to the conflict in Iran, leaving the two sides without a diplomatic channel to de-escalate the dispute.
Analysts warn that technology manufacturers with significant Chinese exposure face heightened risks of supply chain disruptions and increased compliance costs. The investigations target sectors where China has developed dominant positions, particularly in electric vehicle batteries and solar panels, raising concerns about broader impacts on the global energy transition.