The United States strongly criticized China’s semiconductor trade practices on Tuesday. However, as U.S. President Donald Trump works to thaw relations with China, he has opted to postpone the previously announced tariff hike on Chinese semiconductors until after mid-2027.
In a report published on its website, the U.S. Trade Representative (USTR) concluded that China is leveraging non-market economic strategies to dominate the global semiconductor industry. This finding comes after a year-long investigation.
The USTR report details China’s use of various non-market economic tactics.
China injected massive state subsidies into its semiconductor sector, restricted market access for foreign firms, and pressured foreign companies operating in China to transfer technology or forfeit their intellectual property.
The report also criticized China for discriminating against foreign companies through opaque regulations and engaging in unfair competition through exploitative labor practices.
Moreover, the USTR cautioned that China might weaponize semiconductors to exert pressure on other nations.
While China lacks cutting-edge semiconductor manufacturing capabilities, it dominates the market for general-purpose chips, such as those used in automobiles, which are cheaper and require lower technology levels.
Despite the USTR’s harsh criticism of China’s practices, it stopped short of taking immediate action.
The Trump administration had initially planned to raise tariffs on Chinese semiconductors but has now decided to delay implementation until at least June 23, 2027.
Although Trump had previously threatened tariffs as high as 100%, the actual rate is expected to be determined 30 days before implementation.
This decision appears to be influenced by Trump’s meeting with Chinese President Xi Jinping in South Korea last October, where they agreed to a trade war ceasefire.
The two leaders are scheduled to hold a summit in Beijing early next year.
Since Trump took office earlier this year, the two nations have been locked in extreme tension.
Tariffs skyrocketed to as high as 145%, and China even threatened to cut off the supply of rare earth materials, crucial for high-tech industries.
However, with the thawing atmosphere established following the October summit in South Korea, the trade war between the two countries has entered a lull, which ultimately led to the postponement of semiconductor tariffs.
