Trump administration announces new tariffs on Chinese chips and electronic components — but fresh sanctions won't take effect until 2027, and rates remain unknown
The U.S. has made its latest move in the global trade war. Based on the results of a new report, the Trump administration has announced a new round of tariffs on Chinese semiconductor products, though they won't take effect just yet. The de facto for the new tariff is June 23, 2027. The delayed implementation may be thanks to a recent and mild easing of tensions between the U.S. and China, as the Chinese government has itself recently delayed export restrictions on rare-earths products into next year.
At a technical level, per the U.S. Trade Representative notice, the tariffs are already in in place at a 0% rate, a figure that will increase in 18 months on June 23, 2027. The new rate will be known no later than 30 days before that date. Crucially, the new tariffs would be applied on top of the already-existing 50% tax on Chinese semiconductor imports that came into effect January 1 this year.
It's worth noting that while there's some overlap in the late, the tariff codes in the latest sanctions include section 8541 items including diodes, transistors, amplifiers, and optic couplers, but do not include the 8542 section covered by the January 1st tariffs, meaning that different components would have different tariff rates, and some would get hit with a double-strike.
The new tariffs are the result of a year-long survey launched by the Bureau of Industry and Security (BIS), which itself was part of an investigation into China's semiconductor production chain originally launched during the Biden administration. The resulting report has been made public and paints an interesting picture. This part of the investigation focused on "legacy" chips (usually 22nm and larger) and other components like op-amps, analog chips, and diodes — all components that are material to building most any electronic device.
The BIS compares the current over-reliance on Chinese semiconductors to the situation that took place during the COVID pandemic, where it became painfully obvious that far too many products relied on components that had a limited number of centralized sources. In this instance, the BIS found that "across all respondents’ products, 66 percent (by revenue) contained or likely contained at least one chip manufactured by PRC-based foundries," with many respondents to even being able to pinpoint the source of those chips, or when they did, if they originated in the PRC.
The report claims that the situation is the results of "non-market overcapacity and economic coercion." According to HoganLovells, the findings "[point] to China’s industrial policy frameworks, including the Made in China 2025 initiative, which reportedly establishes specific numerical targets for domestic semiconductor production and capacity."
The non-market means through which China allegedly managed to position itself as the source of the bulk of the U.S.' semiconductor supplies include "state-owned or state-controlled enterprises, market access restrictions, opaque regulatory practices, wage suppression, and substantial state financial support through government guidance funds." Analogous to the EV and green energy markets, these practices resulted in an artificial lowering of prices and subsequent concentration of production within China.
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This all happens in a world where China holds the lion's share of rare earth supplies and has used that asset as a weapon in the trade war. Controlling both the raw materials and the means of production of the products they feed into is quite the double-whammy, and it's one that tariffs alone may not be able to stop.
Bruno Ferreira is a contributing writer for Tom's Hardware. He has decades of experience with PC hardware and assorted sundries, alongside a career as a developer. He's obsessed with detail and has a tendency to ramble on the topics he loves. When not doing that, he's usually playing games, or at live music shows and festivals.
