The first of two days of hearings with retail trade associations and supply chain stakeholders took place on Tuesday in Washington as a part of the office of the United States Trade Representative’s Section 301 investigations into excess industrial capacity across 16 foreign economies.
Launched in March along with a separate Section 301 investigation into alleged forced labor in supply chains across 60 countries, the probe focuses on whether U.S. trading partners are leveraging production capacity that exceeds the demands of the international market. The USTR is investigating the unfair advantages and government interventions, like subsidies, that play into the creation and maintenance of bloated manufacturing sectors.
“This excess capacity leads to, among others, overproduction and large or persistent trade surpluses,” the USTR wrote in a March 11 report detailing the scope of the investigation.
The Trump administration has implicated countries including China, the European Union, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, Korea, Vietnam, Taiwan, Bangladesh, Mexico, Japan and India for flooding the market with their products and, consequently, depressing demand for American-made goods.
“The United States will no longer sacrifice its industrial base to other countries that may be exporting their problems with excess capacity and production to us,” USTR Ambassador Jamieson Greer said when the investigation was announced.
Apparel and industry trade groups that submitted comments and testified at the hearing on Tuesday largely aimed at dissuading the USTR from trudging down a path toward new duties that they say would be burdensome, not helpful, to American industry.
The administration has vowed to reconstitute President Donald Trump’s International Emergency Economic Powers Act (IEEPA) tariffs, invalidated in February, by leveraging more established trade statutes.
“This overly broad multi-country investigation seems more like an exercise to reach a pre-determined outcome, rather than a targeted investigation of specific practices,” American Apparel and Footwear Association (AAFA) vice president of trade and customs policy Beth Hughes wrote in comments submitted to the USTR.
She pointed to U.S. Treasury Secretary Scott Bessent’s comments as evidence that the administration aims to levy duties no matter the outcome of the investigation. “We will get back to the same tariff level for the countries. It will be just in a less direct and slightly more convoluted manner,” Bessent said earlier this year.
Hughes said that while the AAFA appreciates the president’s continued efforts to address unfair trade practices and an ever-widening trade imbalance with foreign producers of shoes and clothing, the “[o]ngoing uncertainty around tariff policy compounds these unfair trade practices by disrupting sourcing decisions, undermining long-term planning, and increasing costs for American businesses and consumers.”
“Greater predictability in tariff implementation is essential to strengthening U.S. competitiveness and supporting domestic manufacturing,” she added.
What’s more, the U.S. already imposes tariffs on textiles, apparel, footwear and accessories that exceed other sectors “despite the significant U.S. value embedded in them, including intellectual property, raw materials (such as leather), and textile inputs (such as yarns and fabrics).”
The average trade-weighted tariff rate spanning all imported products hovered around 8 percent in 2025. But rates for fashion products far surpassed the average: 24.4 percent for apparel, 23.5 percent for footwear and 21.9 percent for travel goods, Hughes wrote. The tariffs collected on these goods exceeded $28.2 billion last year.
Not only are these products taxed at higher rates—they contribute a disproportionate amount to the total tariffs collected by customs. In 2025, apparel and footwear made up just 3.4 percent of total imports into the U.S. by value, but the categories accounted for 10.67 percent of the government’s tariff revenue.
Hughes argued that “[m]any countries, including notably the United States, often produce more than they can consume domestically and work to develop foreign markets to absorb that excess production.”
“This is the very definition of international trade and is at the heart of the Trump Administration’s own efforts to dismantle foreign trade barriers. Such efforts are vital to U.S. economic security as access to foreign markets is vital for many manufacturers, farmers, retailers, and service providers,” she added. “If we go down the road of penalizing other countries for engaging in these legitimate activities, we invite those same partners to find fault with our own efforts to export.”
Footwear Distributors and Retailers of America (FDRA) senior vice president of government relations Thomas Crockett testified at the hearing on Tuesday. “When it comes to footwear, trade imbalances are not the result of foreign government manipulation; they are the natural outcome of U.S. consumption patterns meeting global specialization,” he said.
The U.S. imports more than 2 billion pairs of shoes annually—approximately six pairs per person living in the country. In Crockett’s estimation, “consumer demand drives footwear production,” and Americans—as well as U.S. brands selling shoes—require the services of foreign producers to fill the booming demand.
When it comes to President Trump’s long-held desire to spur a sourcing shift away from China—the country with which the U.S. has historically had the largest and most glaring trade deficit—Crockett asserted that the footwear industry has already undergone a significant evolution. It hasn’t been rewarded for its efforts to spread out sourcing to other locales.
“Footwear companies have long recognized the need to diversify sourcing and not become too dependent on a single sourcing country. It also takes years to shift production,” he wrote.
The Trump administration raised tariffs on China-made footwear in 2019 and 2025, and reciprocal tariff rates for China-originating goods at one point last year reached a whopping 145 percent (stacked on top of Most Favored Nation footwear tariff rates). The heightned duties precipitated a shift in production to emerging markets like Indonesia, Cambodia, Vietnam, Bangladesh, and India.
China’s influence in the sector has dropped dramatically as a result; while 87 percent of shoe imports to the U.S. were made in China in 2009, by 2025, that number had dropped to 48 percent. “Those companies that undertook the difficult and costly multi-year task of shifting sourcing outside of China, at the urging of the administration, now face the prospect of 301 tariffs because of production increases outside of China,” Crockett wrote.
Sourcing recalibrations overseas haven’t driven footwear production back to the U.S. The price hikes, also driven by duties, have hurt consumers too, he argued.
“Without accounting for the new tariffs added over the past year, consumer goods have an average tariff rate of 2 percent, but footwear has an average tariff rate of 12 percent. The tariff rates are much higher for children’s shoes. Kids shoes often reach rates of 20 percent, 48 percent, and higher before any news tariffs are added,” Crockett testified.
“Increasing this tariff burden, through new added 301 tariffs, will result in higher costs for hardworking American families at a time when they already face tremendous economic uncertainty,” he said.
Unfortunately for the trade groups, Josh Teitelbaum, trade and policy expert and senior counsel at Akin Gump Strauss Hauer & Feld LLP, believes that “the investigations will definitely yield new tariffs.”
“The administration was clear when they announced these investigations that they would be using them to rebuild the old tariff wall,” he told Sourcing Journal—and it’s proven, based on the accelerated timeline for the Section 301 investigations, that it means business.
Asked how he thinks the probes will play out over the coming weeks and months, Teitelbaum said, “I will be looking for how the new tariff rates differ from the earlier ones, how the apparel accommodation for Bangladesh and Indonesia evolve, and whether the exemption for [Dominican Republic-Central America Free Trade Agreement]-qualifying goods carries over,” among other issues.
