The Office of the US Trade Representative (USTR) has initiated an investigation into China's semiconductor industry, seeking to uncover anti-competitive trade practices. The USTR is scrutinizing China for 'acts, policies and practices' that have diminished or eradicated competition in the semiconductor marketplace.
Based on the US Trade Act of 1974, the investigation will focus on trade practices for 'foundational' semiconductors utilized in industries like automotive, healthcare, infrastructure, aerospace, and defense. The White House claims on Monday that China habitually engages in 'non-market policies and practices, as well as industrial targeting,' within the semiconductor sector, causing considerable harm to competition and creating 'dangerous supply chain dependencies.' If the investigation uncovers actionable violations, Section 301 empowers the USTR to implement duties or import restrictions, withdraw or suspend trade agreement concessions, or negotiate an agreement with China to either rectify the problematic conduct or provide the US with satisfactory trade benefits, as outlined in the US Trade Act. However, the final decisions will rest with President Trump's administration and incoming USTR Jamieson Greer. A spokesperson for China's Ministry of Commerce issued a statement denouncing the US investigation, asserting that China 'strongly deplores and firmly opposes' it. China pledged to 'take all necessary measures to resolutely defend its rights and interests.'