Lawyer Says Component Tariffs Could Result From 301 Investigation Into Chinese Chips
A new Section 301 investigation on Chinese legacy chips may lead to a tariff regime that could create havoc, according to Sidley Austin's Ted Murphy, who specializes in trade and customs.
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"As noted in both the White House fact sheet and in the [Office of the U.S. Trade Representative] initiation notice, foundational semiconductors are in a variety of products. They are in products of critical industries, such as autos, EVs, medical devices, aerospace, critical infrastructure, defense, as well as in many consumer products," he wrote in a blog this month. Because the chips are in finished goods that are imported, whether from China, Vietnam, India or other countries, he said, to properly counter Chinese practices, the U.S. would need to impose component tariffs.
He noted that a Commerce Department report found that more than 40% of surveyed companies didn't know if the products they sold contained legacy chips from China.
A U.S.-China Economic and Security Review Commissioner earlier suggested that Chinese value in goods that originate from other countries would need to be tariffed for a proper trade defense regime (see 2408200040). Princeton University professor Aaron Friedberg told International Trade Today such a regime would be difficult to design and implement.
Murphy said the notices suggest the government is already convinced that Chinese subsidization in this segment burdens U.S. commerce. "It will be up to the incoming Trump administration to decide whether to continue it and to make any final determinations" he wrote. It's not clear what President-elect Donald "Trump’s view will be (although the investigation would appear to be consistent with Trump’s stated trade policy goals)," he wrote.
Murphy suggested that all companies that import products that contain Chinese foundational semiconductors, regardless of where the products are produced, start planning. "The U.S.-China trade relationship is on a rocky road and the ride is not likely to get much smoother in 2025, particularly if component tariffs are implemented."