U.S. scrutinizes Chinese production of semiconductors
With Donald Trump set to take over once more, tensions between the USA and China in the trade sphere are reaching a boiling point. Joe Biden, on his way out, is implementing further pressure on the ongoing dispute by launching an investigation into potential unfair practices in China's semiconductor sector. The scrutiny is particularly focusing on "legacy" chips, produced using obsolete technology, which are incorporated in various goods such as automobiles, washing machines, and telecommunication equipment.
Katherine Tai, the US Trade Representative, shares that the intention behind this move is to safeguard American producers from the influx of state-subsidized semiconductors from China. Evidence suggests that China is harboring ambitions of global leadership in the semiconductor industry, a path they've successfully trodden in sectors like steel, aluminum, solar panels, and electric vehicles.
The investigation will be carried out under Section 301 of the US Trade Act of 1974, a law Trump had utilized in his earlier tenure. During this period, he slapped tariffs of up to 25% on Chinese imports worth around $370 billion in 2018 and 2019.
Once the investigation concludes in January, under the new administration, the possibility arises for Trump to swiftly enforce these threatening high tariffs on Chinese imports.
Manufacturers of chips in the USA may face difficulties due to the investigation launched by Joe Biden into potential unfair practices in China's semiconductor sector. The scrutiny, mainly focusing on legacy chips, could potentially lead to increased competition if China responds with subsidies or protective measures for their own semiconductor manufacturers.
