excess capacity

Excess capacity occurs when the production capabilities of an industry or company surpass the actual demand for its goods or services. This situation can lead to oversupply, price reductions, and reduced profitability. Recent news highlights its relevance in both geopolitical trade disputes and specific industry overhauls. For instance, former US President Donald Trump has invoked "excess capacity" as a reason for imposing new tariffs on certain industries and countries, suggesting it can distort global markets. Simultaneously, companies like China's Geely Auto are actively addressing their own excess capacity through asset restructuring and strategic overhauls. Geely aims to slash oversupply to enhance its global competitiveness in a crowded automotive market. This concept is currently significant as it impacts international trade policies, corporate strategies, and market dynamics, influencing economic decisions and global competition.