President Joe Biden’s administration is launching an investigation that will offer President-elect Donald Trump a choice about whether to enact new tariffs on Chinese-made semiconductor chips.
The White House announced Monday (Dec 23) it would initiate the inquiry into so-called foundational chips — also known as legacy or mature-node semiconductors — made in China. While not as advanced as the chips driving artificial intelligence, the older technology is ubiquitous across a wide range of applications including autos, airplanes, medical devices and the telecommunications industry.
The move tees up potential tariffs on a sector that US officials say may pose a national security risk if too heavily concentrated in Chinese control.
“We need resilient supply chains for these chips, because we saw what happened during Covid when we needed a chip but we can’t have it,” Commerce Secretary Gina Raimondo told reporters Sunday. Relying on overseas suppliers snarled production lines and drove up costs of household goods, she said.
Raimondo and other US officials briefing reporters said China has expressed its desire to dominate the global chip market and is unfairly subsidizing the industry, but the investigation is necessary to take legal action.
Called a Section 301 investigation for the law that authorises it, the US trade representative would first determine whether China’s actions have been “unreasonable” or “discriminatory” and burden US commerce. If so, the future administration could impose retaliatory tariffs, restrict imports — or recommend further action for the president and Congress.
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The probe will take months, leaving any decision up to Trump’s administration, which also used the same trade powers to enact wide-ranging levies on imports from China. Trump said he will nominate Jamieson Greer for trade representative, replacing current representative Katherine Tai.
Biden has moved to bolster the US semiconductor industry, including with a bipartisan subsidy bill. That has included steps to limit the export of advanced technology to China.
US officials worry that China can flood, and corner, the market with older, widely available types of chips and tighten its grip on the sector.
Earlier this year, the White House announced it would increase tariffs on Chinese legacy semiconductors from the current 25% rate to 50% by 2025.
