US Holds Off on New Chinese Chip Tariffs Amid Trump-Xi Truce
But US Accuses China of Engaging in Unfair Trade Practices in Semiconductor Sector
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The U.S. accused China of engaging in unfair trade practices in the semiconductor sector, but is declining to impose additional tariffs on chip imports until at least mid-2027.
The Office of the U.S. Trade Representative on Dec. 23 released the findings of an investigation under Section 301 of the Trade Act into Chinese chips. The probe started during the final months of former President Joe Biden’s administration and concluded amid a tariff truce between Presidents Donald Trump and Xi Jinping.
“China’s targeting of the semiconductor industry for dominance is unreasonable and burdens or restricts U.S. commerce and thus is actionable,” USTR wrote in a Federal Register notice.
While no immediate duties were announced, the government floated the possibility of future ones. The initial tariff level will remain zero for 18 months, increasing on June 23, 2027, “to a rate to be announced not fewer than 30 days prior to that date.”
The Chinese embassy in Washington did not immediately respond to a request for comment.
The decision to hold off on imposing new tariffs is the latest signal that the Trump administration is seeking to stabilize ties with China and solidify the deal that Trump and Xi struck in October in South Korea. Under that agreement, Washington and Beijing agreed to stave off astronomical tariffs and relax export restrictions on technology and critical minerals.
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USTR was legally required to publish the results of the 301 investigation, which began last December, within 12 months of being initiated. Last year, Biden ordered the tariff rate on Chinese semiconductors to increase to 50% under a separate Section 301 probe. By preserving the option to further hike the duties, Trump is creating another potential point of leverage should his tariff deal with Xi fall apart.
The report found that China “has employed increasingly aggressive and sweeping non-market policies” to bolster its semiconductor industry and moved to create foreign dependency on its products in a way that disadvantages U.S. commerce.
The products covered by potential new duties include diodes, transistors, raw silicon, electronic integrated circuits and other inputs. As of now, the would not apply to finished products, such as computers and smartphones, that contain Chinese chips.
