Biden Administration Investigation into Tariffs on Chinese Semiconductors

The Biden administration has launched an investigation that could present President-elect Donald Trump with a crucial decision on imposing new tariffs on semiconductors made in China. The White House announced on Monday that it will open an investigation into so-called critical chips, also known as mature-node or legacy chips, produced in China.

Impact of Semiconductors on Various Industries

Although these chips are not as advanced as those used in artificial intelligence, they are essential for sectors like automotive, aerospace, healthcare, and telecommunications. This action sets the stage for potential tariffs on a sector that U.S. authorities consider a national security risk if it remains overly controlled by China.

Risks of Dependency on China

“We need resilient supply chains for these chips, as we saw during the COVID-19 pandemic when we faced shortages,” said Secretary of Commerce Gina Raimondo, highlighting disruptions caused by dependence on foreign suppliers that hindered production and raised the costs of essential goods.

Global Competition and the China Threat

Raimondo and other U.S. officials emphasized China’s goal of dominating the global chip market, accusing the country of unfairly subsidizing the sector. However, they insist that this investigation is crucial to taking legal steps. Known as a Section 301 investigation, it will assess whether China’s actions are “unreasonable” or “discriminatory” and if they impose a burden on U.S. trade.

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Possible Measures Against China

If the investigation finds that China violated trade rules, the next Trump administration could impose retaliatory tariffs. It could also limit imports or recommend further actions to the president and Congress. This process may take months, as the decision rests with the Trump administration. The administration had previously used similar trade powers to impose broad tariffs on Chinese imports.

Strengthening the U.S. Semiconductor Industry

The Biden administration has worked to strengthen the U.S. semiconductor industry through a bipartisan subsidy bill. These actions include restrictions on exporting advanced technologies to China. The restrictions are due to concerns about China’s potential dominance in the legacy chip market. The fear is that China could consolidate its control over the semiconductor sector.

Tariff Increase for 2025

Earlier this year, the White House revealed plans to increase tariffs on Chinese legacy semiconductors. The current tariff is 25%. By 2025, the tariff will rise to 50%. This move aims to counter China’s growing influence. The effort focuses on the global semiconductor market and its strategic importance.