On December 23, 2024, The U.S. Trade Representative (“USTR”) announced it has initiated a Section 301 investigation into China’s acts, policies, and practices related to targeting of the semiconductor industry. Depending on the results of this investigation, which will be reported in early 2025, President Trump will have the option to assess additional tariffs on commodities within the industries mentioned below, and potentially others as well. This investigation will provide the statutory framework for separate tariffs to be assessed after the notice and comment periods of the investigation conclude.
As explained in the formal notice, this investigation will initially focus on China’s manufacturing of foundational semiconductors (also known as legacy or mature node semiconductors.) Evidence obtained by the USTR suggests that China intends to dominate the semiconductor sector through anticompetitive and non-market means, such as market restrictions, wage-suppressing labor practices, and forced technology transfer, among other examples. Additional evidence indicates that China’s global share of foundational logic semiconductors production capacity has doubled over the last six years and China is projected to reach about half of the world’s capacity by 2029.
This investigation will include reviewing the extent that the foundational semiconductors are incorporated as components into downstream commodities for critical industries like defense, automotive, medical devices, aerospace, telecommunications, power generation, as well as many consumer products.
The investigation will also 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) contribute to any unreasonableness, discrimination, burden or restriction on U.S. commerce, supply chains, and economic security.
Finally, the USTR will examine the connection between the China’s acts, policies, and practices and existing or threatened non-market excess capacity or overconcentration of semiconductor production in China, and the corresponding dependencies and vulnerabilities that create risks for certain critical downstream industries, as well as harm to U.S. semiconductor producers and foundries.
The USTR will open dockets for written comments on January 6, 2025, and any written comments must be filed no later than February 5, 2025. A public hearing will be held on March 11-12, 2025. Requests to appear at the hearing and a summary of testimony must be filed by February 24, 2025.
Importers within the affected industries that use foundational semiconductors may wish to monitor and comment on this investigation. Products incorporating legacy semiconductors may face potential supply chain disruptions and the threat of additional tariffs.
Please contact one of our trade professionals here to determine potential impact to supply chains or to submit comments in this investigation.
New Section 301 Investigation Targets China’s Semiconductors