On December 23, 2024, the Biden administration announced that the Office of the U.S. Trade Representative ("USTR") is launching a new investigation into China's trade practices with respect to the semiconductor industry. In a fact sheet, the White House stated that China “routinely engages in non-market policies and practices, as well as industrial targeting, of the semiconductor industry,” which harms the competitiveness of American industry and creates “dangerous supply chain dependencies.”
The People’s Republic of China (PRC) routinely engages in non-market policies and practices, as well as industrial targeting, of the semiconductor industry that enables PRC companies to significantly harm competition and create dangerous supply chain dependencies in foundational semiconductors.
The investigation will broadly examine Chinese non-market practices related to semiconductors, including the extent to which the products are incorporated into downstream products in industries such as defense, automotive, medical devices, aerospace, telecommunications, and power. The investigation will also examine the production of silicon carbide substrates or other wafers used as inputs for semiconductor fabrication.
Depending on the USTR's findings, the investigation could result in new trade restrictions on Chinese semiconductors. However, such restrictions would likely not be implemented for some time, as Section 301 investigations typically run between 12 and 18 months.
The move comes as the tariff rate on Chinese semiconductors is set to increase on January 1, 2025, following an action by the Biden administration earlier this year to increase tariffs on a range of Chinese products. In addition, President-elect Trump has threatened new tariffs on all Chinese products when he retakes office on January 20, 2025.
In connection with its investigation, USTR will open a docket on January 6, 2025 for public comments to be submitted through February 5, 2025. USTR will also hold a public hearing on March 11, 2025.
Comments