USTR Announces Results of Section 301 Investigation
Immediate Tariff Hike Deferred Despite "Unfair Practices" Finding
Additional Tariff Rate Set at 0%, Increase Planned for 2027
The Donald Trump administration in the United States has decided to temporarily defer the imposition of additional tariffs on Chinese semiconductors. This move is interpreted as an effort to maintain the 'trade war truce' that was tentatively agreed upon during the U.S.-China summit in October.
On the 23rd (local time), the United States Trade Representative (USTR) published the results of its Section 301 investigation in the Federal Register, targeting the policies and practices China has implemented to secure dominance in the semiconductor industry.
While the USTR concluded that countermeasures, including tariffs, are necessary for Chinese semiconductors, it set the immediate additional tariff rate at 0%. Instead, it announced plans to increase the tariff rate starting June 23, 2027, which is 18 months from now, with the specific rate to be disclosed at least 30 days before the tariffs take effect.
This measure follows the Section 301 investigation into Chinese semiconductors initiated by the USTR in December of last year, during the final days of the previous Joe Biden administration. Section 301 of the Trade Act allows the administration to take retaliatory actions such as tariffs if it determines that the policies or practices of a foreign government are unfair or discriminatory and harm U.S. trade. The USTR concluded that China's semiconductor industry development strategy is unfair and either burdens or restricts U.S. commercial activities, making a government-level response possible.
The USTR assessed that China has employed "increasingly aggressive and wide-ranging non-market policies and practices" in the semiconductor industry for decades, resulting in "serious disadvantages for U.S. companies, workers, and the U.S. economy."
Specifically, the USTR cited large-scale state subsidies, forced technology transfers from foreign companies, intellectual property (IP) infringement, opaque regulations, wage suppression, and state-led industrial policies that disregard market principles as problematic examples.
However, the decision to set the additional tariff rate at 0% and defer it for 18 months appears to be influenced by the current 'truce phase' in which the U.S. and China are continuing trade negotiations.
On October 30, the leaders of both countries held a summit in Busan and reached a trade agreement that included the U.S. lowering tariffs on Chinese fentanyl, China suspending rare earth export controls for one year, and resuming imports of U.S. soybeans, temporarily easing tensions. Since then, both sides have shifted to a phase of refraining from unnecessary conflict and managing relations in a stable manner.
However, although the imposition of additional tariffs has been postponed, Chinese semiconductors are already subject to significant tariff burdens. During the first Trump administration, a 25% tariff was imposed on Chinese semiconductors due to concerns over China's unfair technology policies, and the Biden administration raised this to 50% last year, with the new rate taking effect this year.
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