On December 23, 2025, the United States Trade Representative (USTR) determined that China’s policies and practices aimed at dominating the semiconductor industry are unfair and burdensome on U.S. commerce, making them actionable under Section 301 of the Trade Act of 1974. After a year-long investigation, the USTR found that China’s state-driven industrial planning, forced technology transfers, and market restrictions have disadvantaged U.S. companies. Consequently, the U.S. will impose new tariffs on a wide range of Chinese semiconductor products (8-digit tariff classifications provided below), starting at 0% and scheduled to increase after 18 months, on June 23, 2027.
The USTR outlined three main reasons why China’s conduct is unreasonable and burdensome:
(1) China exerts extraordinary control over the semiconductor industry, directing both state-owned and private enterprises through political guidance and non-market advantages, such as, state funding, market restrictions, and forced technology transfer.
(2) China’s practices do not reflect market competition and instead displace foreign firms, depriving market-oriented businesses of opportunities and lessening competition, giving China increasing market power over global supply, pricing, and access in the industry.
(3) China’s dominance creates dependencies and vulnerabilities for foreign competitors and purchasers, which China has previously weaponized for economic coercion.
Additionally, the USTR explained that China’s targeting of the semiconductor industry for dominance burdens or restricts U.S. commerce in several ways, including:
(1) China’s targeted dominance undercuts business opportunities for and investments in the U.S. semiconductor industry, contributing to lost sales, chronic underinvestment, and a diminished U.S. industry, constituting a burden and restriction on U.S. commerce.
(2) China’s strategy creates economic security risks by increasing dependencies and vulnerabilities in sectors critical to the U.S. economy, heightening the potential for disruption and coercion.
Under Section 301 of the Trade Act, the USTR is authorized to take all appropriate actions, including imposing duties or import restrictions on goods from the foreign country under investigation. In the present instance, the USTR determined that Section 301 tariffs on Chinese semiconductors are warranted, with the initial tariff rate set at 0% and scheduled to increase after 18 months on June 23, 2027. The new Section 301 tariffs are in addition to the existing 50% tariff on Chinese semiconductors related to forced technology transfer.
This action applies to a wide range of semiconductor products, including the 8-digit tariff classification subheadings available here.
If you have any questions about this latest development, please contact the Husch Blackwell Trade Team.