How to View the Potential Impact of Section 301 Investigation on Global Trade? Here's What the WTO Chief Economist Says to First Financial

Why is AI investment becoming a driving force for trade growth?

On the 19th local time, the World Trade Organization (WTO) stated in its latest “Global Trade Outlook and Statistics” report that by 2026, recent tariff developments will mainly reflect strategic adjustments rather than fundamental policy shifts.

Specifically, when asked how the current U.S. “Section 301 investigation” might impact global trade, WTO Chief Economist Robert Staiger told Yicai that most parties expect that the final tariff levels, which may be officially implemented, will likely be roughly equivalent to those previously authorized under the International Emergency Economic Powers Act (IEEPA).

“This expectation aligns with our basic assumption that tariff changes in 2026 are unlikely to cause significant shocks to the overall tariff environment faced by countries (and globally).” Staiger added that different countries/regions and product categories will be affected differently in this process.

Impact of Section 301 Investigation

Staiger told Yicai that the U.S. Supreme Court ruled on February 20 to prohibit the U.S. government from imposing tariffs under IEEPA, but shortly afterward, the U.S. implemented tariffs under Section 122, with a uniform rate of 10%. “Although the Trump administration previously announced a possible increase to 15%, so far the rate remains at 10%.”

Subsequently, “the U.S. launched a ‘Section 301 investigation.’ Under U.S. law, tariffs imposed under Section 122 are temporary measures valid for only 150 days. Therefore, if the ‘Section 301 investigation’ concludes definitively that there are ‘unfair trade practices’ against the U.S., which is the core purpose of Section 301, then tariffs implemented under Section 301 are expected to replace the temporary tariffs under Section 122.” He explained that whether these replacement tariffs will be higher or lower than the Section 122 rates remains uncertain.

Regarding whether the Trump administration’s use of Section 122 tariffs to replace IEEPA tariffs indicates a broader shift, Staiger said that “by 2026, there has been no large-scale, systemic tariff shock globally. Of course, there have been some relatively intense tariff changes, such as the Supreme Court ruling on IEEPA tariffs, but these were quickly replaced by new tariffs under Section 122. Our economists’ analysis shows that these tariff replacements did not produce significant macroeconomic impacts.”

According to WTO research, after unprecedented policy fluctuations before 2025 caused volatility, by the end of February 2026, the share of global trade conducted under the Most Favored Nation (MFN) principle had rebounded to 72%. This confirms that MFN remains the dominant framework regulating international trade in most sectors of the global economy.

Staiger noted that the proportion of trade under MFN tariffs has significantly decreased, reflecting erosion of a core principle of rules-based trade systems. However, nearly three-quarters of global merchandise trade still crosses borders under MFN tariffs.

According to the Ministry of Commerce website, a spokesperson said that China has noted that the U.S. has launched Section 301 investigations against 16 economies, including China, citing “overcapacity” as the reason. The 301 investigation is a typical unilateral action that severely disrupts the international economic and trade order. WTO experts have already ruled that tariffs taken under Section 301 violate WTO rules.

The spokesperson also stated that on March 12 U.S. Eastern Time, the U.S. launched a 301 investigation against 60 economies, including China, claiming “no prohibition on the import of forced labor products.” This follows the March 11 initiation of a 301 investigation into “overcapacity.” The spokesperson urged the U.S. to immediately correct its wrongful practices, work with China on the basis of mutual respect and equality, and seek solutions through dialogue and consultation. “We will closely monitor the progress of the U.S. investigation and reserve the right to take all necessary measures to defend our legitimate rights and interests.”

AI Investment as a Main Driver of Trade

Staiger also emphasized to Yicai that, for 2026, tariff changes are unlikely to significantly impact trade conditions. The real main trend is in AI-related investments and the “trade pre-positioning” phenomenon observed in 2025.

WTO data shows that in 2025, global merchandise and services trade grew by 4.7%, far exceeding the 2.9% growth rate of global GDP.

Staiger explained that two main factors contributed to this unusually strong trade growth in 2025: first, North America imported in advance early in 2025 to prepare for tariffs implemented by the U.S. in the second half of the year, leading to a surge in early-year imports that supported global trade levels; second, a boom in investments in AI-related goods and services.

He noted that investment is typically the second-largest component of GDP after consumption, and often more reliant on imports. Changes in investment structure can alter its import content, thereby affecting global trade flows and their relationship with GDP.

“As we stated in our report, even in the case of AI-related investments, they are highly dependent on imports. For example, construction has a low import intensity, usually below 2%. This means that for every dollar invested in construction, only 2 cents come from imports. In contrast, analysis shows that imports for computer equipment and recent AI investments have import intensities of 70% to 90%, meaning that for every dollar invested in AI-related products, 70 to 90 cents are imported.” He explained that shifting investment from construction and other non-AI sectors toward AI-related goods and services will raise import levels within the same overall investment amount.

“This is how the AI investment boom in 2025 helped boost import growth beyond GDP growth and contributed nearly half of the merchandise trade increase that year.” Staiger added that many AI-related products are produced by a few countries, including the U.S. (specializing in chip design, cloud infrastructure, and software), South Korea (manufacturing storage chips and semiconductors), the Netherlands (producing chip manufacturing equipment), Japan (making precision manufacturing tools), and China (focused on hardware assembly, servers, and component manufacturing). Therefore, North America, Europe, and Asia are the regions most directly affected by this AI investment surge.

He further noted that, looking ahead, aside from the duration of the Middle East conflict, another uncertainty is whether the current growth rate of AI-related investments can be sustained into 2026.

“Our baseline forecast assumes that such investments will remain strong but will slow somewhat compared to 2025. If, in reality, the AI investment boom continues at 2025 levels in 2026, our baseline trade growth forecast could be raised by an additional 0.5 percentage points.” he said.

The WTO report indicates that if the Middle East conflict is short-lived and AI-related expenditures remain robust in 2026 and 2027, global merchandise trade growth could reach 2.4% this year and 2.7% next year.