Biden launches new US trade probe into legacy Chinese chips, setting up Trump for tariffs
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The last-minute probe into older Chinese-made “legacy” semiconductors could heap more US tariffs on chips from China that power everyday goods.
PHOTO: REUTERS
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WASHINGTON - The Biden administration has launched a last-minute trade investigation into older Chinese-made “legacy” semiconductors that could heap more US tariffs on chips from China that power everyday goods from vehicles to washing machines to telecommunications gear.
US Trade Representative Katherine Tai said the probe aims to protect American and other semiconductor producers from China’s massive state-driven build-up of domestic chip supply.
The “Section 301“ probe, launched four weeks before President-elect Donald Trump takes office on Jan 20, will be handed over to his administration in January for completion, Biden administration officials said.
The effort could offer Trump a ready avenue to begin imposing some of the hefty 60 per cent tariffs he has threatened on Chinese imports.
Departing President Joe Biden has already imposed a 50 per cent US tariff on Chinese semiconductors that starts on Jan 1. His administration also has tightened export curbs on advanced artificial intelligence and memory chips and chipmaking equipment.
Legacy chips use older manufacturing processes introduced more than a decade ago and are often far simpler than chips used in AI applications or sophisticated microprocessors.
US Commerce Secretary Gina Raimondo said on Dec 23 her department’s research showed that two-thirds of US products using chips had Chinese legacy chips in them, and half of US companies did not know the origin of their chips including some in the defense industry, findings that were “fairly alarming.”
China’s commerce ministry said in a statement that the US chips probe was “protectionist” and would hurt American firms and disrupt the global chip supply chain.
It said Beijing would “take all necessary measures to firmly defend its rights and interests”.
A spokesperson for Trump’s transition team did not immediately respond to a request for comment.
The Biden administration will begin accepting public comments on the probe on Jan 6, and has planned a public hearing for March 11-12.
The probe is being conducted under Section 301 of the Trade Act of 1974, the same unfair trade practices statute Trump invoked to impose tariffs of up to 25 per cent on some US$370 billion worth of Chinese imports in 2018 and 2019, triggering a nearly three-year trade war with Beijing.
The Information Technology Industry Council (ITIC), a trade group representing the US tech sector, said the probe could have complex and far-reaching implications for the global economy and supply chains and urged the US Trade Representative to “not pre-judge the outcome”.
ITIC president Jason Oxman said he was concerned about the probe’s launch during a presidential transition, “and we strongly urge officials in the current and incoming administrations to conduct the inquiry in an objective and collaborative manner”.
Most US smartphones, laptop computers, video game consoles and other consumer electronics products are still imported from China.
A Biden administration official said that in addition to examining the impact of the imported chips themselves, the probe would look at their incorporation into downstream components and end-use goods for critical industries including defense, automotive products and medical devices.
It also will target China’s production of silicon carbide substrates and wafers for semiconductor fabrication. REUTERS
