U.S. Steps Up Tariff Battle on Chinese Legacy Semiconductors

The U.S. Trade Representative's Office is investigating legacy Chinese semiconductors to potentially impose additional tariffs. The hearings aim to protect U.S. semiconductor producers from China's state-driven supply expansion. Concerns remain about the origin of chips in U.S. products and their potential impacts on inflation and industry.

The U.S. Trade Representative's Office is set to convene a hearing focused on Chinese-made legacy semiconductors, a move that could lead to more tariffs on chips powering everyday items. This investigation, initiated during President Biden's term, seeks to shield American semiconductor producers from China's growing domestic supply chain.

Legacy chips, which utilize older manufacturing methods, are embedded in two-thirds of U.S.-based products, as reported by the Commerce Department. Notably, half of the companies in the U.S., including some in defense, are uncertain of the origins of their chips. With older technology involved, these chips are less sophisticated than those designed for AI applications.

The hearing's significance is underscored by former President Trump's advocacy for the repeal of a substantial funding law to fortify U.S. chip production. Set under Section 301 of the Trade Act, the probe echoes earlier tariffs that triggered a trade war with China. Stakeholders warn of potential consequences, including inflation and market distortions, while some Chinese industry groups deny anti-competitive practices.

(With inputs from agencies.)