The United States Trade Representative (USTR) has launched an investigation into China's semiconductor industry, citing concerns over potential anti-competitive trade practices. According to a statement released by the White House, the USTR is specifically scrutinizing China's "acts, policies, and practices" that may have eroded or eliminated fair competition within the global semiconductor market.
This investigation, authorized under Section 301 of the US Trade Act of 1974, is particularly focused on trade practices related to "foundational" semiconductors. These critical components are essential for a wide range of key sectors, including automotive, healthcare, infrastructure, aerospace, and defense. The White House alleges that China has consistently employed "non-market policies and practices, as well as industrial targeting, of the semiconductor industry," leading to significant harm to competition and the development of "dangerous supply chain dependencies."
Section 301 grants the USTR the authority to take action based on the investigation's findings. This could encompass implementing tariffs, imposing import restrictions, withdrawing or suspending concessions made in trade agreements, or engaging in negotiations with China. The objective of such an agreement would be to either eliminate the problematic practices or to compensate the US with acceptable trade benefits. The final decisions regarding these actions will ultimately be made by the current administration and the incoming USTR, Jamieson Greer.
In response, a spokesperson for China's Ministry of Commerce issued a statement expressing China's "strong displeasure and firm opposition" to the US investigation. According to reports in the New York Times, China has pledged to "take all necessary measures to resolutely defend its rights and interests."
This investigation represents the latest escalation in ongoing trade tensions between the US and China. Earlier this year, in February, President Biden initiated an investigation into potential security risks posed by connected vehicles manufactured in China and other unspecified countries. Furthermore, in May, the White House announced a significant increase in tariffs on $18 billion worth of Chinese imports, including semiconductors. This new investigation further highlights the increasing friction in trade relations between the two nations.