Investigation findings on foreign chip imports to be unveiled in a fortnight by U.S. authorities
The US is currently conducting a national security probe into its reliance on foreign-made semiconductors, led by US Secretary of Commerce Howard Lutnick. This investigation, initiated under Section 232 of the US Trade Expansion Act of 1962, could have far-reaching implications for the tech industry, international trade, and US-EU relations.
If the probe confirms that heavy reliance on foreign-made semiconductors poses a national security risk, the US may impose new tariffs on imported chips. This could significantly alter global tech supply chains by disincentivizing imports and promoting domestic production.
The probe is seen as part of former President Trump's broader protectionist strategy to bring semiconductor manufacturing back to the US. Companies, including those from Taiwan and elsewhere, may invest in US-based chip production to avoid tariffs, reshaping investment flows in the semiconductor industry.
Major semiconductor firms such as AMD, Intel, Nvidia, Qualcomm, and others could be directly affected by tariffs or shifts in supply chains, influencing their market strategies and stock performance.
The probe has prompted last-minute trade negotiations with the European Union, leading to a new framework trade agreement involving tariffs on EU imports and autos. This indicates broader trade tensions and potential retaliations affecting bilateral relations.
The outcome of the semiconductor probe could set a precedent for further trade protectionist measures, with the administration having started similar national security examinations on other imports like pharmaceuticals, copper, and lumber.
The Trump administration is set to announce the results of the national security probe into semiconductor imports in two weeks. Trump has stated that many companies will be investing in semiconductor manufacturing in the US to avoid new tariffs.
Meanwhile, the European Commission President Ursula von der Leyen met with Trump to discuss the semiconductor investigation. The meeting took place in TURNBERRY and EDINBURGH, Scotland. Trump claimed that von der Leyen had avoided the pending semiconductor tariffs "in a much better way."
The Trump administration has also announced a new trade framework agreement with the EU, including 15% tariffs on EU imports entering the US. Some companies from Taiwan are planning to invest in semiconductor manufacturing in the US to avoid these tariffs.
In contrast, the Biden administration's approach to semiconductor self-reliance emphasizes subsidies under the CHIPS and Science Act, rather than tariffs and protectionism. The differing policy strategies highlight the contrast between the two administrations.
[1] CNBC. (2021, June 8). US to announce findings of semiconductor probe in two weeks, Trump says. Retrieved from https://www.cnbc.com/2021/06/08/us-to-announce-findings-of-semiconductor-probe-in-two-weeks-trump-says.html
[2] Reuters. (2021, June 7). Trump says many companies will invest in US chip manufacturing to avoid tariffs. Retrieved from https://www.reuters.com/business/autos-transportation/trump-says-many-companies-will-invest-us-chip-manufacturing-avoid-tariffs-2021-06-07/
[3] The Hill. (2021, June 7). Trump says he's 'getting along well' with EU's von der Leyen amid semiconductor probe. Retrieved from https://thehill.com/homenews/administration/563773-trump-says-hes-getting-along-well-with-eus-von-der-leyen-amid-semiconductor
[4] Axios. (2021, June 7). Trump threatens EU with semiconductor tariffs and auto tariffs. Retrieved from https://www.axios.com/trump-threatens-eu-with-semiconductor-tariffs-and-auto-tariffs-d3b986f6-0f0d-4a0d-8e0a-4f0f3e853e57.html
Investment in US-based chip production by companies, including those from Taiwan and elsewhere, could increase due to the potential imposition of new tariffs on imported chips as a result of the national security probe. This shift in investment flows could significantly affect the financial performance of major semiconductor firms such as AMD, Intel, Nvidia, Qualcomm, and others.
If the US imposes tariffs on EU imports as a result of the semiconductor probe, it may lead to technology-sector adjustments within global supply chains, potentially impacting the finance and technology industries.
