Tariffs Become Permanent U.S. Policy Tool! Trump's Next Move Targets Excess Capacity, EU Tech Fines May Trigger New Tariffs

The Trump administration's trade war is far from over. Although the U.S. has already announced maintaining new tariffs of 10% to 12.5% on 60 economies, it is preparing further tariff measures, including an anticipated investigation into excess capacity that could be layered on top of most existing tariffs.

Less than a day after announcing forced labor tariffs, President Trump on Friday (24th) threatened to launch a new Section 301 investigation against the European Union (EU) over its massive fines imposed on U.S. tech giants such as Apple (AAPL-US) and Google, a subsidiary of Alphabet (GOOGL-US).

Additionally, the Office of the United States Trade Representative (USTR) is currently conducting another investigation under Section 301 of the Trade Act of 1974 into 'excess capacity,' which is expected to serve as the legal basis for the next wave of tariff measures.

The new tariffs announced by USTR on Thursday were also invoked under Section 301, citing countries' failure to effectively combat forced labor within supply chains.

Excess Capacity Probe Could Trigger New Tariff Wave

The U.S. launched the excess capacity investigation in March, targeting 16 economies, including the EU, China, Mexico, Japan, and India—major trading partners.

Chris Krueger, Managing Director of TD Cowen’s Washington Research Team, estimates the investigation could conclude within the coming weeks, potentially imposing new tariffs of 10% to 12.5% that would be stacked on top of most existing tariffs. This could provoke further retaliation from China.

Trump and his team had originally planned to announce forced labor tariffs this week to replace the 10% temporary global tariffs, which expire Friday and were levied under Section 122 of the Trade Act of 1974.

Deutsche Bank: Tariffs Now a Permanent Feature of U.S. Economic Policy

Jim Reid, Head of Macro Research at Deutsche Bank, pointed out that while Section 301 tariffs are not permanent and require periodic review—and could still face legal challenges—their legal foundation is far more solid than tariffs overturned by courts earlier this year.

Reid stated, 'More importantly, tariffs are gradually becoming a permanent tool of U.S. economic policy.'

He noted that the U.S. recently announced 25% tariffs on most Brazilian goods, threatened to raise tariffs on Canadian products, and even plans to impose 100% tariffs on imported generic drugs starting in 2028.

Trump Clashes Again with EU: Tech Fines Could Spark New Tariffs

On Friday, Trump posted on Truth Social, targeting the EU for imposing massive fines on U.S. companies like Google, and announced a Section 301 investigation into the EU's 'plundering of American companies and, by extension, American taxpayers.'

On Thursday, the EU ruled that Google abused its market dominance by favoring its own services and restricting app developers, imposing a $1 billion fine.

Trump said, 'These fines will ultimately be fully reversed. We expect to impose massive tariffs on the EU in the shortest possible time.'

Jennifer Hillman, a Georgetown University Law Center professor and former chief legal advisor to the USTR under the Clinton administration, believes the new forced labor tariffs could still face judicial challenges. Critics may argue the administration is overreaching the scope of Section 301 or question whether USTR has truly conducted adequate investigations into forced labor conditions in each country.

Market Focus Shifts to the Next Tariff Wave

Overall, this week’s series of tariff measures indicates that despite the Supreme Court striking down Trump’s tariffs imposed under the International Emergency Economic Powers Act (IEEPA) and ongoing public dissatisfaction over rising living costs, the Trump administration remains committed to tariffs as a core trade tool.

Reid said investors are no longer asking 'whether tariffs exist,' but 'where the next tariffs will land.' Markets will now focus on further exemptions, bilateral negotiations, industry investigations, and the risk of additional new tariffs.

Reid noted that while court rulings once seemed poised to force Trump to significantly roll back his tariff policies, the government has now found a more legally robust pathway to rebuild most of the tariff wall. 'The old tariffs may be over, but the new tariff era has only just begun,' he said.