The United States Trade Representative’s Office (USTR) announced on December 23, 2025, that the U.S. has initiated tariff actions on Chinese semiconductor chips starting from this date. Additionally, tariffs will be increased from June 23, 2027.
These new tariffs are imposed on top of the existing 301 tariffs (50%) imposed on Chinese chips due to the investigation of forced technology transfer.
Following a series of investigations and hearings, the USTR publication in the Federal Register on Tuesday, December 23, recognized Beijing’s pursuit of dominance in the chip industry through its behaviors, policies, and practices as unreasonable. These actions were deemed to impose burdens or restrictions on American businesses, leading to the decision to take action under Section 301 of the 1974 Trade Act, effective from December 23, 2025.
For decades, China (the CCP) has been attempting to monopolize the semiconductor industry and has been adopting increasingly radical and extensive non-market policies and practices to achieve this monopoly position. The notice stated that China’s pursuit of monopoly goals has severely harmed American businesses, workers, and the overall U.S. economy. This has resulted in reduced competition and business opportunities, leading to economic security risks stemming from the dependency and vulnerability in the supply chain with China.
The Biden administration launched the Section 301 investigation into the Chinese chip industry on December 23, 2024, focusing on China’s policies in the chip industry, including downstream critical industries such as defense, automotive, medical, aerospace, telecommunications, power generation, and the power grid.
Throughout this process, China refused to negotiate with the U.S. The USTR received 26 written submissions during the public comment period and held a public hearing on March 11, 2025, leading to the final determination issued on December 23, 2025.
USTR provided three main reasons triggering the 301 trade restrictions: first, China’s extreme control over economic actors grants its semiconductor industry systematic non-market advantages. The Communist Party of China exercises strict control over both state-owned and private enterprises through political guidance, embedding party committees in businesses, and enforcing compliance with CCP national industrial plans.
In China, nearly all businesses must adhere to the CCP’s national industrial plans, viewed as compulsory without autonomy to deviate from the central goals set by the CCP.
This control mechanism allows the CCP to infiltrate every key aspect of the semiconductor supply chain with non-market measures like significant fiscal subsidies, government-directed funds, opaque regulatory advantages, market access restrictions, forced technology transfer (including state-sponsored cyber intrusions and intellectual property theft), and labor policies that depress wages – spanning from wafer manufacturing, design, testing to materials, equipment, and critical minerals.
USTR emphasized that China’s industrial guidance policies seriously violate principles of fair competition and market orientation and distort the global market.
Secondly, China’s industrial policies fundamentally reject market competition mechanisms. In the past 25 years, China has issued over 100 central and local industrial plans with more than 300 qualitative objectives and over 170 quantitative objectives, including setting clear market share indicators (the latest directive requires an 80% domestic market share and a 56% international market share).
USTR stated that these market goals set by the CCP demand Chinese companies to sacrifice foreign competitors at the expense of seizing their position in existing markets and capturing future emerging markets.
Under the CCP model, foreign companies struggle to compete with government-supported resources, leading to declining sales, inadequate investment in production capacity, weakened financing capability, loss of job opportunities, and lowered wage levels.
China has established or neared dominant positions in multiple semiconductor segments, granting significant market power in global supply, pricing, and market access, thus undermining the competitive vitality of the global semiconductor market.
Thirdly, Beijing deliberately creates and utilizes reliance relationships in the supply chain, posing economic security risks to the U.S.
“This dependency not only increases the vulnerability of individual enterprises, industries, and supply chains but also enables China to utilize this dependency for economic coercion,” the notice stated.
In the past, Beijing has repeatedly imposed extensive export controls on key minerals such as gallium, germanium, antimony, weaponizing this dependency relationship without considering the ultimate usage or user interests.
USTR stated, “Such behavior demonstrates China’s willingness to sacrifice market stability to achieve geopolitical objectives, further proving the irrationality of its semiconductor dominance strategy.”