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U.S. Takes Aim at China’s Production of Essential Chips

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The older-style chips are crucial for a wide array of appliances and other machinery, including weaponry.The Biden administration on Monday initiated a trade investigation into China’s production of older types of computer chips that are integral for cars, dishwashers, telecom networks and military weaponry.The probe could ultimately result in tariffs or other measures to block Chinese chips from entering U.S. markets, though the decision of which, if any approach to take would fall to the incoming Trump administration.In industry after industry — from steel and ships to solar panels and electric vehicles — China has pumped money into building world-class manufacturing facilities, creating a surge of low-cost products that ultimately flood global markets. American companies, along with firms in many other countries, finding themselves unable to compete, have shut down, leaving Chinese firms largely in control of the global market.United States officials have been worrying that the semiconductor industry could be next. Chinese companies have been massively ramping up their production of chips, particularly the older types of semiconductors that continue to power a wide array of machinery and appliances. China is building more new semiconductor factories than any other country, a development that American officials argue threatens the viability of chip plants in Europe and the United States.Katherine Tai, the United States Trade Representative, said in a call on Sunday that China’s policies were enabling its companies to rapidly expand and to “offer artificially lower-priced chips that threaten to significantly harm, and potentially eliminate, their market-oriented competition.”That resulted in supply chains that “are more vulnerable and subject to supply chain choke points that can be used to economically coerce other countries,” she said.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    in Economy

    Biden Prepares to Target Chinese Legacy Chips With Trade Investigation

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    The investigation could result in tariffs on older types of chips from China, though the decision would ultimately fall to Trump.The Biden administration is preparing a trade investigation into China’s production of older-model semiconductors, in response to fears that the United States’ growing dependence on these products could pose a national security threat, according to people familiar with the matter and government and industry documents reviewed by The New York Times.The investigation could ultimately result in tariffs, import bans or other actions on certain Chinese chips and the products that contain them. But the decision about what course to take would fall to the incoming Trump administration. The Biden administration may initiate its investigation in the coming weeks, but it would most likely take at least six months to conclude.The U.S. government has already tried to clamp down on China’s access to the most advanced types of semiconductors due to national security concerns. But it has largely left untouched China’s production of older types of chips, which are still vital for powering a huge swath of products including smartphones, cars, dishwashers, refrigerators and weaponry, along with American telecommunications networks.But with Chinese companies and the government now investing heavily in new factories, or fabs, to make those “legacy” or “foundational” chips, U.S. officials are concerned that Chinese production could put chip factories in the United States or allied countries out of business. That could increase U.S. supply chain dependence on China and potentially pose cybersecurity threats as those chips are integrated into American infrastructure or weaponry.“China is subsidizing those chips in these new fabs, dumping them into the global market and tanking the price,” Gina Raimondo, the commerce secretary, said at the Reagan National Defense Forum in Simi Valley, Calif., on Dec. 7. “That isn’t fair. And there may be a case for tariffs on that.”The Biden administration has been weighing whether to proceed with a trade investigation under two different laws. One is Section 232 of the Trade Expansion Act, which focuses on threats to national security and falls to the Commerce Department. The other option is Section 301 of the Trade Act of 1974, which applies to acts that are “unjustifiable” or “unreasonable” and burden U.S. commerce, and is carried out by the Office of the United States Trade Representative.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    in Economy

    How U.S. Firms Battled a Government Crackdown to Keep Tech Sales to China

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    An intense struggle has unfolded in Washington between companies and officials over where to draw the line on selling technology to China.At a meeting in Washington this spring, tech company representatives and government officials once again found themselves at odds over where to draw the line when it came to selling coveted technology to China.The Biden administration was considering cutting off the sales of equipment used to manufacture semiconductors to three Chinese companies that the government had linked to Huawei, a technology giant that is sanctioned by the United States and is central to China’s efforts to develop advanced chips.Applied Materials, KLA Corporation and Lam Research, which make semiconductor equipment, argued that the three Chinese companies were a major source of revenue. The U.S. firms said that they had already earned $6 billion by selling equipment to those Chinese companies, and that they planned to sell billions more, two government officials said.U.S. officials, who view the flow of U.S. technology to Huawei as a national security threat, were stunned by the argument. In regulations issued this month, they ultimately rejected the American companies’ plea.Over the past year, an intense struggle has played out in Washington between companies that sell machinery to make semiconductors and Biden officials who are bent on slowing China’s technological progress. Officials argue that China’s ability to make chips that create artificial intelligence, guide autonomous drones and launch cyberattacks is a national security threat, and they have clamped down on U.S. technology exports, including in new rules last week.But many in the semiconductor industry have fought to limit the rules and preserve a critical source of revenue, more than a dozen current and former U.S. officials said. Most requested anonymity to discuss sensitive internal government interactions or exchanges with the industry.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    in Economy

    Commerce Dept. Is on the Front Lines of China Policy

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    The department has confronted the challenge of China by restricting key exports, a policy that is likely to continue in the Trump administration.The Commerce Department has traditionally focused on promoting the interests of American business and increasing U.S. exports abroad. But in recent years, it has taken on a national security role, working to defend the country by restricting exports of America’s most powerful computer chips.While the Trump administration is likely to remake much of the Biden administration’s economic policy, with a renewed focus on broad tariffs, it is unlikely to roll back the Commerce Department’s evolution.“I’m truthfully not terribly worried that the Trump administration will undo all the great work we’ve done,” Gina Raimondo, the commerce secretary, said in an interview. “Number one, it’s at its core national security, which I hope we can all agree on. But two, it is the direction that they were going in.”It was the first Trump administration that took the initial steps toward the Commerce Department’s evolution, Ms. Raimondo noted, with its decision to put the Chinese telecommunications company Huawei on the “entity list.” Companies on the list are deemed a national security concern, and transfers of technology to them are restricted.Ms. Raimondo came into the commerce job focused on confronting the challenge of China by building upon the Trump administration’s actions.She has overseen a significant expansion of U.S. economic and technology restrictions against China. The Biden administration transformed the tough but sometimes erratic actions the Trump administration had taken toward Beijing into more sweeping and systematic limits on shipping advanced technology to China.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

  • 150 Shares131 Views

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    Trump’s Threats About the Dollar Could Push Other Countries to Find Alternatives

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    President-elect Donald J. Trump threatened to impose tariffs on countries that seek to replace the dollar in trade or undermine its global reserve currency status.When Republicans nominated Donald J. Trump to be their presidential candidate over the summer, the party’s platform included a pledge to maintain the role of the United States dollar as the world’s reserve currency.Since winning the election, Mr. Trump has indicated that he wants to deliver on that promise. Over the last week he warned that if the group of nations known as BRICS countries — which include Brazil, Russia, India, China and South Africa — tried to create their own currency to rival the dollar, he would punish them with 100 percent tariffs and shut them out of U.S. markets.“There is no chance that the BRICS will replace the U.S. Dollar in International Trade, and any Country that tries should wave goodbye to America,” Mr. Trump wrote on social media.The warning was intended to preserve the dollar’s premier status, but economists and analysts suggested that it could have the opposite effect. Although it appears unlikely that the BRICS would be able to create their own currency, the aggressive use of tariffs and sanctions by the United States is the reason that other nations have increasingly been considering alternatives to the dollar. By making such threats, Mr. Trump could end up accelerating that trend.“Threatening retaliation against the unlikely creation of a BRICS currency only reinforces the rest of the world’s concerns about the U.S. willingness to wield dollar dominance as an economic and geopolitical weapon,” said Eswar Prasad, the former head of the International Monetary Fund’s China division. “This will intensify other countries’ attempts to diversify away from use of the dollar for international payments and for foreign exchange reserves.”The dollar has been the world’s dominant currency for about a century and has served as the world’s reserve currency since the end of World War II. It makes up the majority of foreign exchange reserves held in global central banks and is widely used in international transactions such as trade and loans.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

  • 113 Shares91 Views

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    Biden Targets China’s Chip Industry With Wider Trade Bans

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    New rules prohibit the sale of certain types of chips and equipment to China, in an effort to close loopholes and cement the Biden administration’s legacy in countering the U.S. rival.The Biden administration announced on Monday broader restrictions on advanced technology that can be sent to China, in an effort to prevent the country from developing its own advanced chips for military equipment and artificial intelligence.The restrictions will prohibit the sales of certain types of chips and machinery to China, and will add more than 100 Chinese companies to a restricted trade list. The move marks the Biden administration’s third major update over the past three years to a set of rules that have tried to cut China off from the world’s most advanced technology.The rules are also likely to be the administration’s last on Chinese technology before President-elect Donald J. Trump’s inauguration next month, aiming to cement the Biden administration’s legacy in slowing down a rival country’s technological progress.Commerce Secretary Gina Raimondo told reporters in a call on Sunday that the move represented “the strongest controls ever enacted by the U.S. to degrade the P.R.C.’s ability to make the most advanced chips that they’re using in their military modernization,” referring to the People’s Republic of China. She said the government had worked closely with experts, industry and allied countries to ensure that “our actions protect national security while minimizing unintended commercial consequences.”National security officials have said that China’s ability to acquire and make advanced computer chips poses a threat to the United States. The chips are crucial for powering artificial intelligence and supercomputers that can be used to launch cyberattacks, design new weapons, erect surveillance systems and increase the military’s ability to respond accurately and rapidly to foreign attacks.In October 2022, the Biden administration issued its first sweeping restrictions on China, by banning sales of advanced A.I. chips and certain chip-making machinery to the country. In October 2023, the Biden administration built on those rules to capture more types of A.I. chips.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

  • 113 Shares137 Views

    in Economy

    Tariff Threats Show Trump’s Commitment to Upending Global Trade

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    The president-elect’s threat to hit Canada, Mexico and China with new tariffs is already rocking business and diplomatic relationships and could topple the trade pacts he signed in his first term.President-elect Donald J. Trump’s threats to impose damaging tariffs on Canada, Mexico and China may ultimately be an opening wager to try to use the power of the American market to persuade other countries to stem a flow of drugs and migrants across U.S. borders.But even if the threat to impose vast tariffs on some of the world’s largest economies is a negotiating tactic, it is also a gambit that has immediate real-world consequences.Before Mr. Trump even sets foot in the Oval Office, his threat to put tariffs on America’s three largest trading partners on his first day in office was reverberating around the world, shocking international businesses, rocking diplomatic relationships and calling into question two big trade deals that Mr. Trump negotiated during his first term.Mr. Trump’s pronouncement late Monday that he would impose a 25 percent tariff on all goods from Canada and Mexico and a 10 percent tariff on products from China was immediately denounced by business groups, who said such a move would cause economic harm. Foreign officials rushed to reassure the incoming Trump administration that they had been working to stop drugs and migrants from coming into the United States — while warning that they were also ready to turn around and impose their own tariffs on American exports.Mr. Trump’s threats may have been intended to silence investors and economists who have recently questioned whether the president-elect would go through with imposing the big levies he promised while campaigning. In the run-up to the election, Mr. Trump pledged to put a 60 percent tariff on goods from China and a tax of at least 10 percent on all other imports. Such a move could ignite a global trade war, slowing economies around the world.Whether Mr. Trump’s threats ultimately show his prowess as a deal-maker or simply sow chaos, they are a reminder that the president-elect is eager to upend global relationships to try to secure points for the United States. That includes a willingness to potentially topple the trade pacts that he himself worked to put in place with Mexico, Canada and China during his first term after he used bruising tariffs to force them into making concessions.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

  • 150 Shares118 Views

    in Economy

    Trump Plans Tariffs on Canada, China and Mexico That Could Cripple Trade

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    President-elect Donald J. Trump said on Monday that he would impose tariffs on all products coming into the United States from Canada, Mexico and China on his first day in office, a move that would scramble global supply chains and impose heavy costs on companies that rely on doing business with some of the world’s largest economies.In a post on Truth Social, Mr. Trump mentioned a caravan of migrants making its way to the United States from Mexico, and said he would use an executive order to levy a 25 percent tariff on goods from Canada and Mexico until drugs and migrants stopped coming over the border.“This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!” the president-elect wrote.“Both Mexico and Canada have the absolute right and power to easily solve this long simmering problem,” he added. “We hereby demand that they use this power, and until such time that they do, it is time for them to pay a very big price!”In a separate post, Mr. Trump also threatened an additional 10 percent tariff on all products from China, saying that the country was shipping illegal drugs to the United States.“Representatives of China told me that they would institute their maximum penalty, that of death, for any drug dealers caught doing this but, unfortunately, they never followed through,” he said.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

  • 150 Shares169 Views

    in Economy

    Is Trump More Flexible on China Than His Hawkish Cabinet Picks Suggest?

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    President-elect Donald J. Trump is assembling a team of aides bent on confrontation with China. But he also has advisers who do business there, including Elon Musk.They are the new class of cold warriors, guns pointed at China.President-elect Donald J. Trump has chosen cabinet secretaries and a national security adviser who stress the need to confront China across the entire security and economic spectrum: military posture, trade, technology, espionage, human rights and Taiwan.Those choices could open a new era of conflict with a nuclear-armed nation that has the world’s largest standing army and second-largest economy, and where many top officials see the United States as a superpower in decline.Mr. Trump’s hawkish advisers so far include Marco Rubio, a Florida senator named as secretary of state; Michael Waltz, a Florida congressman tapped for national security adviser; and Pete Hegseth, a former Fox News television personality designated to be defense secretary. Cabinet secretaries must be confirmed by the Senate, although Mr. Trump has floated the idea of getting around that by using recess appointments.Those men are more explicitly hostile to China than their counterparts in the Biden administration, though President Biden has taken an aggressive tack with China and continued some of the policies from Mr. Trump’s first term. A consensus has solidified among Democrats and Republicans in Washington that China must be constrained because it is the nation most capable of upending American global dominance.Yet there are signs that Mr. Trump might consider a more moderate approach on trade, perhaps to avoid upsetting a roaring stock market nurtured by Mr. Biden.Mr. Trump with President Xi Jinping of China in Beijing in November 2017. Mr. Trump hosted Mr. Xi at Mar-a-Lago earlier that year, but their budding relationship eventually fell apart over a trade war that Mr. Trump started.Doug Mills/The New York TimesWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More