The Biden administration has initiated a trade investigation under Section 301 of the Trade Act of 1974, targeting Chinese-made “legacy” semiconductors. These older chips power everyday products like automobiles, washing machines, and telecom equipment. The probe, announced just four weeks before President-elect Donald Trump’s inauguration, aims to protect U.S. and allied semiconductor manufacturers from China’s aggressive, state-backed efforts to dominate the global chip market.
The investigation adds to a series of measures that Biden has taken against Chinese semiconductors, including a 50% tariff on imports starting January 1 and tighter export controls on advanced chips and chipmaking equipment. While the Biden administration has laid the groundwork, the Trump administration will take over the probe’s completion in January, potentially leveraging it to impose the sweeping tariffs Trump has long advocated.
The Stakes for U.S. Semiconductor Policy
U.S. Trade Representative Katherine Tai emphasized that the investigation seeks to address China’s market-distorting practices, which include subsidizing domestic chipmakers to expand capacity and undercut global competitors.
Commerce Secretary Gina Raimondo added urgency, revealing research showing that two-thirds of U.S. products using semiconductors rely on Chinese legacy chips. Alarmingly, half of U.S. companies remain unaware of the origin of their chips, including some operating in the defense sector.
The probe extends beyond semiconductors themselves, examining their integration into critical industries such as defense, automotive, and medical devices. It will also scrutinize China’s production of silicon carbide substrates and wafers, essential materials for chip fabrication.
Global and Domestic Reactions
China’s Ministry of Commerce criticized the investigation as a “protectionist” move that would disrupt global supply chains and harm American companies. Beijing vowed to take “all necessary measures” to defend its interests.
U.S. industry groups expressed mixed reactions. The Information Technology Industry Council warned of the probe’s potential to disrupt supply chains further, urging both the Biden and Trump administrations to approach the issue collaboratively.
Meanwhile, many U.S. tech companies remain reliant on Chinese semiconductors for consumer electronics such as smartphones, laptops, and video game consoles. The ripple effects of any tariffs or restrictions could be felt across global supply chains, especially as the U.S. ramps up efforts to rebuild its domestic chip production with the $52.7 billion CHIPS Act.
A Public Hearing and Road Ahead
The Biden administration plans to begin accepting public comments on January 6, with a public hearing scheduled for March 11-12. The investigation is expected to be completed within a year, leaving the Trump administration to steer its direction and conclusions.
This probe follows the same statute that Trump used during his first term to impose tariffs on $370 billion worth of Chinese imports, sparking a prolonged trade war with Beijing. While the focus now shifts to legacy semiconductors, the outcome could have profound implications for U.S.-China trade relations, domestic supply chains, and critical industries dependent on reliable chip access.
The COVID-19 pandemic exposed vulnerabilities in global semiconductor supply chains, leading to production halts in industries from automotive to medical devices. The U.S. has since accelerated efforts to reduce reliance on foreign chip supplies, with bipartisan support for domestic manufacturing incentives. However, rebuilding a robust supply chain will take years, making the results of this trade probe pivotal for shaping long-term strategies.
As Trump takes office in January, he will inherit an investigation poised to be a cornerstone of his trade agenda.