Date: October 2, 2026
Reporter: Emilly Jordan
Several members of the Group of 20 rejected a U.S. push for the bloc to take a stronger collective position on excess industrial capacity, exposing divisions among major economies over trade policy, manufacturing and China's role in global markets.
U.S. Trade Representative Jamieson Greer said G20 trade ministers meeting in Milwaukee, Wisconsin, broadly agreed that excess industrial capacity was a problem requiring action but could not reach consensus on how the issue should be addressed.
The dispute centres on the production of goods in quantities that exceed domestic demand, potentially resulting in increased exports and downward pressure on prices in overseas markets. The United States has argued that such overproduction can undermine manufacturers in other countries and has increasingly used tariffs and other trade measures in response.
Greer said many G20 members expressed concerns about excess capacity, particularly in relation to China, which he said was exporting large quantities of relatively inexpensive goods into international markets.
“Nearly all countries agree that this is an issue that requires action,” Greer said, adding that members also agreed existing trade remedies were inadequate to address the problem.
However, the ministers did not agree to include language condemning structural excess industrial capacity in their joint statement. China has rejected accusations that its industrial policies have created harmful overcapacity and has argued that Western governments are using the issue to justify protectionist measures.
European officials have expressed concerns similar to those raised by Washington. European Trade Commissioner Maros Sefcovic said the growth of excess capacity and resulting exports could threaten industries in Europe, including steel and automobile manufacturing.
Sefcovic said Europe was interested in “concentrated action” to address the issue, arguing that the scale of excess production had grown substantially over the past decade.
The disagreement demonstrates the difficulty of developing a common G20 approach to industrial policy. While many governments recognize concerns about excess production and trade distortions, countries differ over whether the appropriate response should involve tariffs, trade remedies, domestic industrial policies or international coordination.
India has also pushed back against broad assumptions about excess industrial capacity. Commerce and Industry Minister Piyush Goyal said India does not have structural excess manufacturing capacity in the sectors identified by the G20 presidency. He argued that any trade action should be based on specific and verifiable evidence rather than assumptions about an entire country or sector and should comply with World Trade Organization rules.
Goyal also said India's manufacturing capacity serves both domestic and international markets. He acknowledged concerns about trade-distorting support and dumping but argued that such concerns should be addressed through evidence-based mechanisms such as WTO anti-dumping and countervailing-duty procedures.
The Milwaukee meeting also exposed divisions over forced labour in global supply chains. G20 trade ministers were unable to reach agreement on language condemning imports produced through forced labour, according to Greer.
The U.S. administration has made forced labour a significant element of its trade policy and has used related concerns to justify tariffs on imports from numerous countries. Greer said some G20 members were unwilling to commit to prohibiting imports produced using forced labour.
The ministers did, however, agree on language condemning what they described as the coercive use of food in international trade. The issue reflects broader concerns among governments about trade restrictions being used to exert political or economic pressure.
The United States also raised a separate proposal to reform the World Trade Organization's Most Favored Nation system, which has provided the foundation for nondiscriminatory tariff treatment in the global trading system since the post-World War II period.
Greer argued that the existing system does not sufficiently promote reciprocity and balance and can allow countries to benefit from trade arrangements without providing equivalent market access. Washington did not seek a formal G20 statement on the proposal, saying the issue required a longer-term discussion.
The trade ministers' meeting also included discussions about high energy prices and fuel supplies. Greer said U.S. officials had positive discussions with French, German and other European representatives about possible cooperation involving strategic diesel reserves.
He suggested that releasing some fuel from emergency reserves could increase supplies and help ease prices, although he did not directly address a Reuters report that Washington had warned France and Germany they could face restrictions on U.S. diesel exports if they failed to release emergency stocks.
The disagreements at the G20 meeting come as the global trading system faces increasing pressure from tariffs, industrial subsidies, supply-chain disruptions and competition between major manufacturing economies.
Washington has increasingly focused on what it regards as unfair trade practices and industrial overproduction, while China has rejected claims that its manufacturing policies are responsible for global market distortions. European countries have expressed concerns about the impact of Chinese exports on their industries but have also sought to maintain trade relationships and avoid a wider escalation in protectionism.
The G20 discussions therefore ended without a common position on one of the most contentious issues in global trade: how governments should respond when domestic production exceeds demand and exports place pressure on competing industries abroad.
Although ministers agreed that excess industrial capacity was an issue requiring further attention, the failure to reach agreement on a collective response leaves individual governments to continue pursuing their own trade and industrial policies while discussions among major economies continue.