White House calls for investigation into China’s alleged anti-competitive semiconductor industry

The Office of the US Trade Representative (USTR) has started a probe into China’s semiconductor industry, looking for anti-competitive trade practices. According to a White House statement, the USTR is looking into China for “acts, policies and practices” that reduced or eliminated competition in the marketplace for semiconductors.

The probe is being conducted through Section 301 of the US Trade Act of 1974 to examine trade practices for “foundational” semiconductors that are used by the automotive, healthcare, infrastructure, aerospace and defense industries. The White House accused China on Monday of “routinely” engaging in “non-market policies and practices, as well as industrial targeting, of the semiconductor industry” that caused significant harm to its competition and created “dangerous supply chain dependencies,” according to the statement.

If action is taken as a result of the investigation, Section 301 allows the USTR to “impose duties or other import restrictions,” “withdraw or suspend trade agreement concessions” or enter into an agreement with China to “either eliminate the conduct in question…or compensate the US with satisfactory trade benefits,” according to the US Trade Act. Those decisions, however, will be left to President Trump’s administration and incoming USTR Jamieson Greer.

A spokesperson for China’s Ministry of Commerce said in a statement that China “strongly deplores and firmly opposes” the US investigation. The nation would also “take all necessary measures to resolutely defend its rights and interests,” according to the New York Times.

Tensions between the US and China are already high. President Biden launched an investigation in February into China and other unnamed countries over possible vulnerabilities and threats from connected vehicles. Then in May, the White House announced a significant increase in tariffs on $18 billion worth of Chinese imports including semiconductors.