Tariffs Still Not Helping Chip Industry

Article By : Dylan McGrath, EE Times

New tariffs, new retaliatory threats

SAN FRANCISCO — U.S. President Donald Trump again ratched up the U.S.-China trade war, levying tariffs on an additional $200 billion worth of imports from China — including parts and materials used in semiconductor manufacturing.

The U.S. Trade Representative released a list of about 5,745 types of Chinese imports that will be hit with an initial 10% tariff beginning Sept. 24. The tariff levied on these products is set to increase to 25% in January.

The new tarrifs announced Monday escalate a trade war that has been building for months between the world’s two largest economies. The U.S. previously imposed a 20% tariff on about $50 billion worth of Chinese imports in two separate tranches. Both times, China swiftly enacted reciprocal tariffs on U.S. products exported to China.

China has vowed to match all tariffs against its products imposed by the Trump administration. In a statement Monday, Trump warned that doing so would further escalate the trade war.

“If China takes retaliatory action against our farmers or other industries, we will immediately pursue phase three, which is tariffs on approximately $267 billion of additional imports,” Trump said.

At the heart of the trade war is the two sides’ failure to come to terms on a comprehensive trade agreement that Trump wants to reduce the U.S. trade deficit with China — estimated to be about $375 billion last year. The administration has also sought protection from what it considers  theft of American intellectual property and forced transfer of American technology.

Chinese products on Monday’s list include raw silicon and other products used in chip making, including items such as quartz reactor tubes and holders designed for insertion into diffusion and oxidation furnaces for semiconductor wafer production. The list also includes smart cards, as well as technology products used in data centers and networking gear.

The list does not include Apple products such as iPhones or the Apple Watch or Airpods — two items that Apple expressed concern could be hit with tariffs in this latest round.

The U.S. Trade Representative said it removed 297 types of products from an original list of 6,031 after a six-week comment period and testimony during a six-day public hearing in August.

Both the Semiconductor Industry Association (SIA) and SEMI — a trade group which represents semiconductor equipment vendors and others — testified during the August hearing that imposing the tariffs on semiconductor industry products would put U.S. companies at a disadvantage in relation to international competitors and threaten the market share of U.S. firms in China, as well as hurting U.S. exports and jobs while raising the cost of goods for U.S. consumers.

Chip and equipment firms and industry groups have expressed support for the administration’s aims around intellectual property protection. But both the SIA and SEMI — like nearly all U.S. trade groups, economists and analysts — oppose the tariffs, which they say will ultimately harm the global economy and penalize U.S. companies and consumers.

— Dylan McGrath is the editor-in-chief of EE Times.

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