The Office of the US Trade Representative (USTR) has concluded a year-long Section 301 investigation into China's acts, policies, and practices related to its semiconductor industry, determining that they are actionable under US trade law. The findings were published in a notice dated December 23, 2025, and are scheduled to appear in the Federal Register on December 29.
According to the document, the investigation was initiated on December 23, 2024, and examined China's efforts to target the semiconductor sector for global and domestic dominance. The probe covered not only standalone semiconductors but also chips incorporated into downstream products used in critical industries such as defense, automotive, aerospace, telecommunications, medical devices, and power generation. USTR requested consultations with Beijing under Section 303 of the Trade Act, but China declined to engage.
Findings and rationale
According to USTR, the investigation found that China's semiconductor strategy relies on non-market practices that distort competition and restrict US commerce. These include extensive state direction of both state-owned and private enterprises, mandatory adherence to industrial policy targets, and widespread financial and regulatory support aimed at accelerating market share gains.
USTR cited more than 100 central and local industrial plans issued over the past 25 years, which collectively set hundreds of qualitative and quantitative targets across the semiconductor supply chain, including chip design, fabrication, assembly, testing and packaging, as well as materials and manufacturing equipment. Past plans aimed for China-based firms to account for up to 80% of domestic semiconductor sales and more than half of global sales, targets that USTR said would necessarily displace foreign competitors.
The agency also pointed to practices such as forced technology transfer, intellectual property theft, opaque regulatory discrimination, wage-suppressing labor policies, and large-scale state funding through government guidance funds. These measures, USTR said, allow Chinese firms to operate without market constraints, undermining competition and reducing commercial opportunities for US companies.
Impact on US commerce and security
USTR concluded that China's approach has burdened US commerce by contributing to lost sales, underinvestment, and reduced competitiveness in the US semiconductor industry. The agency also highlighted broader economic security risks, arguing that China's growing role across multiple segments of the semiconductor value chain has increased US dependence on a single supplier ecosystem.
The notice cited China's use of export controls on materials such as gallium, germanium, and antimony as evidence of its willingness to leverage supply-chain dependencies for economic coercion. Such dependencies, USTR said, increase vulnerability to disruptions across critical sectors of the US economy.
Tariff action and implementation
As a result of the determination, USTR announced new tariff action on semiconductors from China under Section 301. The initial tariff rate is set at 0%, effective December 23, 2025. However, the duty is scheduled to increase after an 18-month period, with a higher rate taking effect on June 23, 2027. The final tariff level will be announced in a separate Federal Register notice at least 30 days before implementation.
These new tariffs will be imposed in addition to the existing 50% Section 301 duties already applied to Chinese semiconductors under a separate investigation related to forced technology transfer.
Products affected and next steps
The action covers a wide range of semiconductor products, including silicon wafers, doped chemical elements for electronics, discrete devices such as diodes and transistors, photosensitive semiconductor devices, integrated circuits for processors, memory and amplifiers, and related parts. USTR said it will continue to monitor the effectiveness of the measures and assess whether further action is necessary.
The move signals a continued hardening of US trade policy toward China's semiconductor sector, with potential implications for bilateral trade, global chip supply chains, and future tariff escalation.
Subheadings likely to be impacted | |
Tariff Code | HS Description |
28046100 | Silicon containing by weight not less than 99.99 percent of silicon |
38180000 | Chemical elements doped for use in electronics, in the form of discs, wafers etc., chemical compounds doped for electronic use |
85411000 | Diodes, other than photosensitive or light-emitting diodes |
85412100 | Transistors, other than photosensitive transistors, with a dissipation rating of less than 1 W |
85412900 | Transistors, other than photosensitive transistors, with a dissipation rating of 1 W or more |
85413000 | Thyristors, diacs and triacs, other than photosensitive devices |
85414910 | Other photosensitive semiconductor diodes, other than light-emitting |
85414970 | Photosensitive transistors |
85414980 | Photosensitive semiconductor devices nesoi, optical coupled isolators |
85414995 | Other photosensitive semiconductor devices, other than diodes or transistors, nesoi |
85415100 | Other semiconductor-based transducers, other than photosensitive transducers |
85415900 | Other semiconductor devices, other than semiconductor-based transducers, other than photosensitive devices, nesoi |
85419000 | Parts of diodes, transistors, similar semiconductor devices, photosensitive semiconductor devices, LED's and mounted piezoelectric crystals |
85423100 | Electronic integrated circuits: processors and controllers |
85423200 | Electronic integrated circuits: memories |
85423300 | Electronic integrated circuits: amplifiers |
85423900 | Electronic integrated circuits: other |
85429000 | Parts of electronic integrated circuits and microassemblies |
Article edited by Joseph Chen
