Bangladesh, Cambodia, China, the European Union, India, Indonesia, Japan, Korea, Malaysia, Mexico, Norway, Singapore, Switzerland, Thailand, Taiwan, Vietnam.
In the Reagan-era Washingtoon comic, Rep. Bob Forehead’s political consultants grow disenchanted with bland “buzzwords” such as “jobs” and “big spenders.” (Short and easy to grasp, yes, but voters sense a lack of intellectual weight.) Anticipating a presidential campaign launch and worried about “an emerging perception of Bob as being purely image and lacking in substance”, they supplement his buzzwords with “fuzzwords”. These are long polysyllables — e.g., “the Federal Reserve should abandon its targets of aggregates” — which also lack intellectual weight, but sound complicated and thus have a desirably confusing and numbing effect on the public.
Life imitates art: Four decades later, aware that short 2025 tariff slogans like “new golden age” and “reindustrialization” aren’t landing, the Trump administration is trying the same thing. Last week the U.S. Trade Representative Office published a Federal Register Notice introducing a nine-syllable neologism — “structural excess capacity” — as a new intellectual foundation for tariff increases:
“The Trump Administration’s reindustrialization efforts continue to face significant challenges due to foreign economies’ structural excess capacity and production in manufacturing sectors. Across numerous sectors, many U.S. trading partners are producing more goods than they can consume domestically. This overproduction displaces existing U.S. domestic production or prevents investment and expansion in U.S. manufacturing production that otherwise would have been brought online.”
As policy, the Notice announces a “Section 301” investigation of 16 economies — Bangladesh, Cambodia, China, the European Union, India, Indonesia, Japan, Korea, Malaysia, Mexico, Norway, Singapore, Switzerland, Thailand, Taiwan, and Vietnam — for “structural excess capacity”. For readers new to trade-bar jargon, Section 301 is a 1974 statute giving administrations some ability to threaten tariffs on goods from particular countries, in hopes of getting them to remove objectionable policies. Typical uses, mostly in the 1980s and 1990s but more recently vis-à-vis China, were on specific things: limits on U.S. exports, intellectual property appropriation, etc. Using this law for “structural excess capacity” — it seems essentially to mean a country’s overall industrial output; see below — is novel.
Obvious first question: Who is writing these Notices, anyway? As a fuzzword, “structural excess capacity” has the right murky tone, but astute readers quickly catch its natural acronym: “SExC.” So the administration is accusing the Euros, as well as the Japanese, Thais, Mexicans, Bangladeshis, etc., of excessive SExCiness and threatening them with tariffs for it. Too hot to fly! Americans above the age of twelve have learned over the last year that tariffs are taxes paid by buyers, so this isn’t technically a fine on foreigners for unreasonable hotness – they might pay willingly — but a demoralizing tax, probably in the tens of billions of dollars, on Americans for lacking it.
More analytically, the “structural excess capacity” concept rests on the premise that a country which makes more of something than it needs at home is doing something wrong. If it simply limited production to local needs, Americans would buy less from them and make the stuff ourselves instead. The Notice uses two data points as evidence of SExCiness: (a) selling more goods abroad (in general, or to Americans specifically) than one buys, and (b) factories running at “capacity utilization” rates below 80%, a level its drafters claim indicates more supply of manufactured goods on the market than the world wants or needs. Samples:
Norway: “Evidence of structural excess capacity and production exists for Norway. Norway maintains a global goods trade surplus, led by exports in sectors such as mineral fuels and oils, certain electronic equipment, and machinery. … At 77.7 percent in Q4 2025, Norway’s rate of capacity utilization was more than a full percentage point below what it was a year ago, and over two percentage points less than it was three years ago. In addition, Norway engages in policies and practices that have the effect of undervaluing its domestic currency, including the use of state-owned or -controlled enterprises to recycle oil revenues into non-domestic currencies, like the U.S. dollar, rather than its domestic currency.”
Cambodia: “Evidence of structural excess capacity and production exists for Cambodia. Cambodia maintains a bilateral trade surplus with the United States, which in 2024 was approximately $1 billion. Evidence indicates its garment, footwear, and travel goods (GFT) sector exported $11.8 billion in the first nine months of 2025, a 16 percent increase from the same period in 2024. When Cambodia’s GFT industry was facing uncertainty with U.S. tariffs, Cambodia’s Deputy Secretary-General stated that enhancing capacity along the product chains was an option to further boost the manufacturing sector and create lucrative opportunities.”
So Norwegians produce more energy than they use at home, maliciously sell the extra Brent crude to refiners in other countries, and on top of that, use dollars (as energy traders everywhere typically do) rather than krone. Cambodians likewise stitch more clothes and rivet together more suitcases than Phnom Penh’s schoolchildren and business travelers need. The resulting sectoral trade surpluses not only demonstrate the two countries’ SExCiness but help frustrate Trump-team hopes of “reindustrialization” and “a new golden age.”
The ostensible goal of the “301” investigation, therefore, is that threats of tariffs will persuade the Norwegians and Cambodians to drill less oil and sew fewer duffel bags, and then someone will be better off. Three observations:
1. “Structural excess capacity” is not a meaningful concept: The Notice’s premise is wrong, as American experience quickly shows. U.S. factories produce more airplanes and artificial body parts than American air carriers and hospitals require. They sell the extras to customers abroad — three in every four U.S.-made airplanes, for example — which is good for foreign travelers and patients, and also brings in money to hire more workers and fund next-gen research. American farmers grow almonds and wheat than American kitchens and restaurants need, and send respectively 75% and 45% overseas, mostly to Asia. Same with software, natural gas, music, and film. That’s how American aerospace, medical technologies, and agriculture, as well as tech, energy, and entertainment, succeed and grow. The same thing happens in other countries.
2. “Structural excess capacity” reduction is an implausible use of Section 301. The administration’s hope for less world SExCiness must mean either “increasing world demand for goods,” or “reducing output of goods.” The Notice makes pretty clear it’s the latter. Its 16 economies account for about $10.7 trillion in manufacturing output, two-thirds of the world’s total. At a capacity utilization of 75%, that suggests a potential output of about $14.3 trillion. Raising utilization to 80% — again, the level the Notice claims would put supply in line with demand — by reducing production entails persuading foreign governments to take around $1 trillion worth of annual clothes, cars, toys, soap, helicopters, medicines, and other goods offline. Not likely.
3. And probably not the real goal anyway. Back in 1974, the authors of “Section 301” hoped to find ways to remove or mitigate policies they didn’t like. In 2026, the Treasury Secretary, Mr. Bessent, says the Trump administration just wants “alternative legal authorities” to replace the “international emergency” tariffs the Supreme Court axed in February. By that measure, the 301 investigation is simply another attempt to take Congress’ Constitutional authority over “Taxes, Duties, Imposts, and Excises,” impose tariffs by decree, and hope courts don’t stop it.
Coda: Rep. Forehead’s problem in Washingtoon wasn’t vocabulary choice. Rather, the public’s emerging perception of him as all-image and low-substance was correct. Likewise, in 2026, the administration’s problem isn’t one of “messaging”. It’s the conclusions Americans have drawn, after a year of rising costs, slowing growth, and falling hires, about the real-world impact of tariff increases. Replacing faded 2025 slogans with long new words — even with more dignified acronyms — won’t solve it.
PPI’s four principles for response to tariffs and economic isolationism:
Washingtoon (1983) explains the balance of buzzwords and fuzzwords.
U.S. Trade Representative Office test-markets “structural excess capacity,” launches “Section 301” investigation.
… while Sec. Bessent says the investigation’s real point is quite different.
From Congress, Sen. Ron Wyden and Rep. Richard Neal concisely pan the “investigation.”
Law:
Section 301 text. Note that it directs administrations to identify specific “acts, practices, or policies” that in some way unfairly burden American trade, and doesn’t mention “producing more [oil, clothes, etc.] than one can use at home”.
Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.
Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.
Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.
Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.
