Washington (Reuters) – The Biden administration has announced a trade investigation into Chinese-made “legacy” semiconductors, potentially leading to additional tariffs on chips from China used in various everyday products. This probe, known as a “Section 301” investigation, was launched shortly before President-elect Donald Trump assumes office on Jan. 20 and will be continued by his administration in January.
The investigation aims to protect American chip producers from China’s state-driven efforts to dominate the semiconductor industry. The U.S. Trade Representative’s office will conduct the probe, focusing on the impact of imported chips on industries such as defense, automotive, and medical devices. The investigation will also address China’s production of silicon carbide substrates and wafers for semiconductor fabrication.
Commerce Secretary Gina Raimondo highlighted that a significant portion of U.S. products utilizing chips contain Chinese legacy chips, with many companies unaware of the origin of these components. The probe is set to gather public comments starting Jan. 6, with a public hearing scheduled for March 11-12. If taken up by the incoming administration, the probe must be completed within a year of initiation.
The United States is ramping up efforts to bolster its own semiconductor supply chain with a significant investment of $52.7 billion in new subsidies for chip production, research, and workforce development. This move comes in response to China’s ambitious plans to dominate the global market by establishing more than 60% of the world’s new legacy chip capacity over the next decade, a development that has raised concerns about unfair competition and potential implications for U.S. competitiveness.
Commerce Secretary Gina Raimondo expressed apprehension over China’s aggressive push in the semiconductor industry, highlighting the risks it poses to American companies and the nation’s reliance on Chinese-made chips for various everyday applications. She emphasized that such dominance by China could undermine U.S. interests and economic independence in a critical sector that plays a pivotal role in modern technologies.
Despite the divergent policies of the Trump and Biden administrations, there appears to be a rare point of agreement when it comes to trade relations with China. President Biden has opted to maintain the tariffs imposed by his predecessor on Chinese imports while also imposing additional levies, such as 100% duties on electric vehicles manufactured in China. These measures aim to protect domestic industries and prevent the influx of Chinese products that could potentially disrupt the U.S. market.
The ongoing commitment to tariffs on Chinese goods reflects a continuity in the U.S. government’s stance on trade policy, signaling a strategic approach to addressing challenges posed by China’s economic strategies. The Biden administration’s decision to uphold and expand these tariffs underscores the administration’s resolve to safeguard American interests and promote fair competition in the global marketplace.
As the U.S. navigates the complexities of international trade and economic dynamics, the semiconductor industry emerges as a critical battleground where strategic investments and policy decisions will shape the future of technological innovation and national security. The competition with China for dominance in semiconductor manufacturing is not merely a commercial rivalry but a contest for strategic advantage and influence in key sectors that underpin the digital economy.
In this evolving landscape of trade tensions and technological competition, the U.S. government’s actions reflect a broader commitment to protecting national interests and fostering a competitive environment for American businesses. By prioritizing investments in semiconductor production and research, the U.S. aims to strengthen its position in a crucial industry that underlies the development of advanced technologies and maintains a strategic edge in an increasingly digitized world.
The path forward for the U.S. semiconductor industry will require sustained efforts to build domestic capabilities, enhance supply chain resilience, and foster innovation in key technological domains. By addressing the challenges posed by China’s growing influence in the global semiconductor market, the U.S. seeks to assert its leadership and ensure a secure and competitive future for its technology sector.
In conclusion, the U.S. government’s response to China’s semiconductor ambitions reflects a strategic imperative to protect American interests, promote fair competition, and advance technological innovation. The investment in the semiconductor supply chain underscores a commitment to bolstering domestic capabilities and ensuring the nation’s economic resilience in a rapidly evolving global landscape.
