The Biden administration announced on Monday (December 23) that it has initiated a trade investigation into traditional semiconductors manufactured in China. This investigation could ultimately lead to the imposition of tariffs on certain Chinese chips and products containing these chips, the implementation of import bans, or other actions.
These chips are widely used in everyday products such as cars, washing machines, and telecommunications equipment.
According to Reuters, U.S. Trade Representative Katherine Tai stated that evidence uncovered by the U.S. Trade Representative’s office responsible for this investigation shows that Beijing is targeting the semiconductor industry in an attempt to achieve global dominance, similar to its behavior in steel, aluminum, solar panels, electric vehicles, and critical minerals.
The Chinese authorities have been assisting their semiconductor companies in rapidly expanding production capacity through state support, enabling them to offer chip products at prices below market rates.
Tai pointed out that this rapid expansion of production capacity and the provision of artificially low-priced chips pose a threat to normal market competition, with the low-price competition threatening competitors who rely on market rules and even facing the risk of being forced out of the market.
Over the past two years, the Biden administration has imposed export restrictions on advanced semiconductors produced using U.S. and allied technology.
Recently, outgoing President Biden has implemented stricter export controls on China regarding advanced artificial intelligence (AI), memory chips, and manufacturing equipment. His administration has decided to impose a 50% tariff on Chinese semiconductors starting from January 1.
Furthermore, on December 11, the Biden administration announced an increase in tariffs on Chinese solar wafers and polysilicon to 50%, effective from January 1 next year.
According to Reuters, this new investigation based on Section 301 of the Trade Act of 1974 was initiated four weeks before President Trump took office on January 20. Biden administration officials stated that this investigation will be completed by the new government in January.
The Biden administration will start accepting public comments on this investigation from January 6 and plans to hold a public hearing on March 11-12. If the Trump administration takes over this investigation, it must be completed within a year of initiation.
This effort could provide the new administration with a ready-made path to begin imposing high tariffs of 60% on Chinese imports.