More Tariffs on Imports from China Possible Under New Section 301 Investigation

The Biden administration has opened the door to even more tariffs on imports from China by launching a new Section 301 investigation regarding China’s acts, policies, and practices related to “targeting of the semiconductor industry for dominance.” A previous Section 301 investigation several years ago resulted in tariffs of 7.5 to 25 percent on hundreds of billions of dollars’ worth of imports from China that are still in place.

According to the Office of the U.S. Trade Representative, evidence indicates that China “apparently seeks to dominate domestic and global markets in the semiconductor industry and undertakes extensive anticompetitive and non-market means, including setting and pursuing market share targets, to achieve indigenization and self-sufficiency.” There is also evidence that this approach “is leading to significant capacity expansion, artificially and unsustainably lower domestic and global prices, a protected domestic market, and emerging overconcentration of production capacity” in China.

USTR states that its Section 301 investigation will initially focus on China’s manufacturing of foundational semiconductors (also known as legacy or mature node semiconductors, which are used in many consumer goods), including to the extent that they are incorporated as components into downstream products for critical industries like defense, automotive, medical devices, aerospace, telecommunications, and power generation and the electrical grid. The investigation will also initially assess whether the impact of China’s acts, policies, and practices on the production of silicon carbide substrates (or other wafers used as inputs into semiconductor fabrication) contributes to any unreasonableness or discrimination or burden or restriction on U.S. commerce.

USTR states that it has already requested consultations with China on the issues under investigation. USTR will accept written comments on these issues between Jan. 6 and Feb. 5, 2025. There will also be a public hearing March 11-12 and requests to appear are due by Feb. 24. A final determination, and a decision on what action to take if the determination is affirmative, may not be made until late 2025.