USTR Concludes Section 301 Semiconductor Investigation, Announces Phased Tariff Action on China

The Office of the United States Trade Representative has concluded that China’s acts, policies, and practices aimed at achieving dominance in the semiconductor industry are actionable under Section 301 of the Trade Act of 1974 and warrant responsive trade action. Action however will not take place for 18 months.

In a notice of action filed December 23 and scheduled for publication December 29, USTR determined that China’s long-running, state-directed strategy to dominate semiconductors is “unreasonable” and “burdens or restricts U.S. commerce.”

The agency announced that it will impose new Section 301 tariff action on semiconductors from China, beginning with an initial tariff rate of zero percent, rising in 18 months to a level to be announced no fewer than 30 days before June 23, 2027. The action is effective December 23, 2025.

The determination follows a Section 301 investigation launched in December 2024, which examined China’s use of non-market policies to advance semiconductor self-sufficiency and global market share, including in fabrication, design, assembly, testing, packaging, materials, and equipment.

USTR found that China has issued more than 100 national and sub-national industrial plans over the past 25 years addressing semiconductors, setting hundreds of qualitative and quantitative targets for production, domestic content, and market share.

According to the notice, these policies rely on extensive state control over economic actors, massive financial support through government guidance funds, market access restrictions, forced technology transfer and intellectual property theft, opaque regulatory preferences, and labor practices that suppress wages.

USTR concluded that adherence to industrial targets is effectively mandatory for Chinese firms, allowing the state to direct commercial behavior in ways that displace foreign competitors and distort market outcomes.

USTR also emphasized economic-security concerns, citing China’s creation of supply-chain dependencies and its demonstrated willingness to weaponize them, including through export controls on critical minerals such as gallium and germanium. The agency found that these practices undercut U.S. investment, reduce competition, and increase vulnerability in sectors critical to national security and economic resilience, including defense, automotive, medical devices, aerospace, telecommunications, and the electrical grid.

The new tariff action will apply to a defined list of semiconductor-related products identified at the eight-digit Harmonized Tariff Schedule level, including silicon wafers, doped chemical elements, discrete semiconductor devices, and integrated circuits. The tariffs will be imposed in addition to existing Section 301 duties, including the current 50 percent tariff on certain Chinese semiconductors stemming from the earlier forced-technology-transfer investigation.

USTR said it will continue to monitor the effectiveness of the action and assess whether additional measures are warranted.

China's Acts, Policies, and Practices Related to Targeting of the Semiconductor Industry for Dominance