Overview
The U.S. Trade Representative’s Office (USTR) has launched an investigation into alleged anti-competitive practices in China’s semiconductor industry. The investigation, announced by the White House, focuses on China’s policies and practices that may undermine competition in this critical sector.
Key Details
The Focus of the Probe: The investigation targets “foundational” semiconductors used in vital industries such as automotive, healthcare, aerospace, and defense.
Legal Framework: The probe is conducted under Section 301 of the U.S. Trade Act of 1974, which allows the USTR to examine trade practices and take action if violations are found.
Allegations Against China
The White House accuses China of engaging in:
Non-market policies and industrial targeting distort competition.
Creating “dangerous supply chain dependencies” by undermining global semiconductor markets.
Potential Outcomes
If the investigation confirms violations, the USTR could:
Impose tariffs or other import restrictions on Chinese goods.
Withdraw or suspend trade agreement concessions with China.
Negotiate agreements requiring China to either rectify the alleged conduct or offer compensatory trade benefits to the U.S.
China’s Response
China’s Ministry of Commerce strongly opposes the investigation, labeling it as unjustified. In a statement, the ministry vowed to take “necessary measures” to defend its rights and interests.
Broader Context
Ongoing U.S.-China Trade Tensions: This probe adds to existing trade disputes. Earlier this year, the U.S. increased tariffs on $18 billion worth of Chinese imports, including semiconductors.
Focus on Tech and Security: The Biden administration has also launched investigations into vulnerabilities linked to connected vehicles, further heightening tensions.
Why It Matters?
Semiconductors are essential to modern industries and national security. The investigation highlights growing concerns about reliance on Chinese manufacturing and the potential risks posed by anti-competitive practices in the global supply chain. This latest development reflects the ongoing economic and geopolitical challenges between the two largest economies in the world.
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