The United States has ended the previous administration’s investigation into China’s chip trade and will not impose additional tariffs on Chinese chips in the next 18 months.

# Source: Wall Street Insights

The U.S. government announced on the 23rd that it will impose additional tariffs on Chinese chips starting in 2027, bringing to a close the trade investigation into Chinese chips initiated by the previous Biden administration. U.S. media analysts noted that while the U.S. government claims China’s practices in the chip industry "undermine U.S. interests", the final decision refrains from imposing extra tariffs on Chinese chips for at least 18 months. Bloomberg stated that the suspension of new tariff hikes is the latest signal that the U.S. government is seeking to consolidate the China-U.S. "truce" agreement and stabilize bilateral relations.

The Office of the U.S. Trade Representative (USTR) launched a Section 301 investigation into China’s mature-node chip industry last December, aiming to clarify the industry’s impact on the U.S. economy. After nearly a year of soliciting opinions and evaluating data, the U.S. side released the results this Tuesday. According to Reuters, the USTR said in a statement that China’s pursuit of dominance in the semiconductor sector is "unreasonable" and imposes burdens or restrictions on U.S. commercial activities, thus justifying potential U.S. actions.

The *New York Times* reported that the government will initially impose a 0% tariff on semiconductors imported from China, and plans to raise the tariff rate starting June 2027. The specific tariff level has not yet been determined and "will be announced at least 30 days in advance".

The latest U.S. government statement concludes a one-year investigation into China’s legacy chips. The *New York Times* pointed out that these chips are widely used in smartphones, automobiles, household appliances, telecommunications networks and even military weapons. The report noted that in recent years, bipartisan U.S. lawmakers have grown increasingly concerned that the deepening U.S. reliance on these products may pose a "national security threat". "China has invested heavily in the production of older-generation chips, making it difficult for U.S. factories manufacturing similar products to remain operational."

"This sector has experienced rapid growth in China in recent years. The U.S. is attempting to use tariff measures to ease the competitive pressure on domestic enterprises in the mature chip market while reducing reliance on Chinese chip supplies," said Zhou Mi, a researcher at the Chinese Academy of International Trade and Economic Cooperation, in an interview with the *Global Times* on the 24th. He added that the chip industry is highly globalized, and it is difficult to reshape the industrial landscape solely through tariff measures. If the U.S. ultimately takes action, its practice of politicizing economic and trade issues will not only disrupt market mechanisms and raise costs for all parties, but may also backfire on its own high-tech industry and trigger ripple effects in multiple sectors including artificial intelligence, as well as in other countries.

At a regular press conference on the 24th, Chinese Foreign Ministry Spokesperson Lin Jian stated that China firmly opposes the U.S. abuse of tariffs and unreasonable suppression of Chinese industries. "We urge the U.S. to correct its wrongdoings as soon as possible. Guided by the important common understandings reached by the heads of state of the two countries, we should resolve respective concerns through dialogue on the basis of equality, respect and mutual benefit, properly manage differences, and maintain the stable, healthy and sustainable development of China-U.S. relations. If the U.S. insists on going its own way, China will resolutely take corresponding measures to safeguard its legitimate rights and interests," Lin Jian said.

The *New York Times* cited analysis from former U.S. trade official Sarah Schuman, who noted that China is "very sensitive" to U.S. actions targeting it or its enterprises. The report argued that the U.S. government’s suspension of new tariff hikes this time is part of a series of moves to maintain the status quo following the conclusion of the trade "truce" agreement with China. Reuters mentioned that the U.S. has also delayed a rule restricting the export of U.S. technology to subsidiaries of blacklisted Chinese companies. In addition, the U.S. launched a review last week into NVIDIA’s sales of advanced AI chips to China, despite strong objections from U.S. hawkish politicians on China.

"The latest move preserves the U.S. government’s ability to impose tariffs while seeking to ease tensions with Beijing," Reuters analyzed.

Zhou Mi believes that the relatively restrained signals recently released by the U.S. government are mainly due to its reluctance to further escalate China-U.S. economic and trade frictions amid the current international and domestic environment. After the achievements reached in China-U.S. economic and trade consultations, the U.S. also intends to maintain a relatively stable economic and trade atmosphere, avoiding disruptions to potential high-level interactions and communication arrangements caused by relevant policy measures.

Currently, the U.S. government is also conducting another investigation under Section 232 of the U.S. Trade Expansion Act, covering semiconductors and other products, which is regarded as a precursor to tariff imposition. The *New York Times* stated that these tariffs were initially expected to be announced this summer, but U.S. government officials have been weighing how to impose them in a way that both encourages the development of U.S. manufacturing and does not damage relations with China.

**Source**: Global Times

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