Key Points
- The Biden administration initiated a Section 301 investigation into Chinese legacy semiconductors.
- The probe may lead to additional tariffs and will transition to Trump’s administration for completion.
- Before leaving office, Biden imposed 50% tariffs on Chinese semiconductors and solar components.
- The investigation focuses on legacy chips and their impact on critical U.S. industries.
The Biden administration has initiated a last-minute trade investigation into Chinese-made legacy semiconductors. This move could lead to additional U.S. tariffs on these chips, which are integral to products like automobiles, washing machines, and telecom equipment.
This “Section 301” investigation is announced just four weeks before President-elect Donald Trump’s inauguration on January 20. Trump’s administration will be responsible for completing the probe, potentially allowing it to implement the significant tariffs on Chinese imports he has repeatedly proposed.
President Biden has already imposed a 50% tariff on Chinese semiconductors, effective January 1, and has tightened export restrictions on advanced AI and memory chips and chipmaking equipment to China. The administration also increased tariffs on Chinese solar wafers and polysilicon to 50%. The U.S. Trade Representative’s office stated that the investigation aims to counter China’s state-driven expansion in the semiconductor sector, which threatens market-driven competition.
U.S. Trade Representative Katherine Tai highlighted evidence that Beijing’s policies, similar to its strategies in steel, aluminum, solar panels, and electric vehicles, are geared toward achieving global dominance in semiconductors. She noted that China’s subsidized chip production undermines competition by offering artificially low prices, putting market-oriented producers at risk. The probe focuses on legacy chips, which use older manufacturing processes in everyday applications, excluding advanced chips for AI and microprocessors.
The investigation will examine the impact of imported chips and their use in critical industries, including defense, automotive products, and medical devices. It will also assess China’s production of silicon carbide substrates and wafers. U.S. Commerce Secretary Gina Raimondo revealed that two-thirds of U.S. products utilizing chips contain Chinese legacy semiconductors, raising alarms about dependency and security risks.
The U.S. has allocated $52.7 billion in subsidies to bolster domestic semiconductor production. Still, Raimondo warned that China’s plans to build 60% of global legacy chip capacity over the next decade undermine these efforts. Tariffs on China are expected to remain a shared priority between Biden’s and Trump’s administrations.