Trump imposes 15% tariff on key chip material to counter China
The move aims to counter Chinese producers, which hold a monopoly in the global polysilicon production.
In a move aimed at countering China's dominance, President Donald Trump on Thursday signed an executive order implementing a 15% tariff on imported products derived from polysilicon, a vital component in semiconductors and solar panels. China currently stands as the world's largest producer of this material.
The order also established minimum import prices for polysilicon and related goods, following a national security investigation into overseas production of the material. This action is designed to safeguard U.S. manufacturers facing heightened competition from China's chip industry, a significant point of contention between the two largest global economies.
The Chinese embassy in Washington stated that this measure "seriously disrupts" bilateral trade and affirmed Beijing's intent to protect its companies. The embassy accused Washington of "abusing state power to go after Chinese businesses," asserting that protectionism would not enhance U.S. competitiveness.
President Trump, in the order, indicated his acceptance of recommendations from Secretary of Commerce Howard Lutnick to impose both the 15% tariff and minimum import prices on polysilicon and related imports. These measures are slated to become effective in December. The U.S. also plans to introduce incentives to bolster domestic production.
Trump, a long-time proponent of tariffs for job protection and economic growth, stated that for decades, the U.S. has permitted "foreign firms to weaken United States producers in the polysilicon sector." He highlighted the material's critical role in military equipment and electronics, noting that imports have caused the U.S. share of global polysilicon production to plummet from 50% in 2005 to under 2% in 2024. China currently holds a near monopoly on polysilicon production.
The order is expected to benefit key domestic producers such as Hemlock Semiconductor and Wacker Chemie. The production of computer chips is central to the U.S.-China rivalry in artificial intelligence (AI) development.
Analysts cited by the Chinese state media outlet Global Times view the new tariff as the latest escalation in Washington's efforts to restrict China's involvement in critical technology supply chains. This action follows previous U.S. restrictions on imports of drones, humanoid robots, and other tech products from China.