us scrutinizes china's semiconductor ambitions: hearing set for march 11

2025-03-08 general

Washington, D.C., Saturday, 8 March 2025.
the united states trade representative (ustr) is intensifying its examination of china’s semiconductor policies. a hearing is scheduled for march 11, focusing on practices designed to dominate the industry. this inquiry is under section 301, addressing concerns about china’s strategic targeting of the semiconductor sector. this action follows president trump’s suggestion to eliminate the usd$52 billion chips act. the white house is also considering restricting chinese ai firm deepseek, including banning its chatbot from government devices, a move that raises questions about open-source ai.

section 301 investigation and market impact

The USTR’s investigation is based on Section 301 of the Trade Act of 1974 [1][GPT]. This act allows the U.S. to investigate and counter unfair trade practices [1]. A prior Section 301 investigation led to tariffs up to 25% on approximately $370 billion of Chinese imports from 2018 to 2019 [4]. The U.S. stock market closed down on March 6, 2025, reflecting investor apprehension regarding potential tariff implications [3]. Any increase in tariffs could affect consumer electronics, the automotive sector, and telecommunications supply chains in the U.S [4].

concerns over mature semiconductor technology

The hearing will address China’s production of mature semiconductors, technologies developed more than a decade ago [4]. These chips are essential components in everyday items like cars, washing machines, and telecommunications equipment [4]. A Commerce Department report from December indicated that two-thirds of products using chips in the U.S. contain older chips made in China [4]. Alarmingly, half of U.S. companies, including some in the defense sector, cannot confirm the origin of their chips [4]. The U.S. already imposed 50% tariffs on Chinese semiconductors starting January 1, 2025 [4].

divergent views on china’s semiconductor industry

Reactions to the investigation vary. The China Association of Automobile Manufacturers argues that China’s automotive chip industry developed without unfair competition [4]. Conversely, the American Innovation Foundation asserts that China exploits U.S. free market policies to monopolize markets and weaken American companies [4]. The foundation warns of serious consequences if the U.S. does not address Chinese subsidies and market distortions in silicon carbide (SiC) wafers [4]. The China Chamber of Commerce for Import and Export of Machinery and Electronic Products opposes new tariffs, arguing they will increase U.S. inflation and harm American consumers and businesses [4].

shipping industry implications

Brokers in the liquid bulk market are adopting a cautious approach, awaiting further developments [2]. Actions against container ships could also impact chemical markets [2]. Linerlytica reports that proposed charges on Chinese-built ships could disrupt trade by causing a shift away from U.S. routes [2]. Chinese carriers account for approximately 17% of U.S. container imports from Asia [2]. The Shanghai Export Containerized Freight Index (SCFI) has declined for eight consecutive weeks, dropping 5.21% on March 7, 2025, to 1,436.3 points [5]. These factors contribute to volatility in the shipping market, as noted by industry analysts [5].

potential actions and counter measures

The USTR is considering service fees up to $1.5 million per port call for Chinese-built vessels and up to $1 million for China-based operators [2]. These measures aim to bolster U.S. shipbuilding and reduce reliance on Chinese-built vessels [8]. A USTR report indicated China’s shipbuilding market share increased from under 5% in 1999 to over 50% in 2023 [8]. This has increased China’s ownership of the commercial world fleet to over 19% as of January 2024 [8]. Taiwan Navigation chairman Liu Wen-ching emphasizes the need to monitor Trump’s tariff policies as key variables affecting freight rates [3].

Bronnen

Trade Policy Semiconductors