By David Shepardson
WASHINGTON (Reuters) -The U.S. Trade Representative’s Office will hold a hearing on Tuesday into older Chinese-made “legacy” semiconductors that could heap more U.S. tariffs on chips from China that power everyday goods from autos to washing machines to telecoms gear.
The probe, which was started under then-President Joe Biden in December, aims to protect American and other semiconductor producers from China’s massive state-driven buildup of domestic chip supply. A 50% U.S. tariff on Chinese semiconductors started on Jan. 1.
Legacy chips use older manufacturing processes introduced more than a decade ago and are often far simpler than chips used in AI applications or sophisticated microprocessors.
The Commerce Department said in December that two-thirds of U.S. products using chips had Chinese legacy chips in them, and half of U.S. companies did not know the origin of their chips including some in the defense industry.
The hearing comes as President Donald Trump has called for the repeal of a $52.7 billion law to boost U.S. chips manufacturing that has made awards to Intel Samsung Electronics, Micron, TSMC and others.
The probe is being conducted under Section 301 of the Trade Act of 1974, the same unfair trade practices statute Trump invoked to impose tariffs of up to 25% on some $370 billion worth of Chinese imports in 2018 and 2019, triggering a nearly three-year trade war with Beijing.
The China Association of Automobile Manufactures told USTR it believes the Chinese auto chips industry “does not employ anti-competitive and non-market means to achieve its objectives.”
The Foundation for American Innovation plans to argue China is exploiting America’s free-market system and free trade-oriented policies “to corner markets, undermine U.S. firms, and gain influence over key supply chains” and will warn of “the consequences of a failure to take action to address China’s subsidies and market distortions” on silicon carbide wafers.
The China Chamber of Commerce for Import and Export of Machinery and Electronic Products said in comments with USTR new tariffs “would lead to a higher US inflation rate and substantial harm to U.S. households, consumers, importers and exporters, and domestic companies in the industry.”
(Reporting by David Shepardson; Editing by Chris Reese and Chizu Nomiyama)
