The Trump administration will impose tariffs on Chinese semiconductor imports over Beijing's pursuit of chip industry dominance, but has postponed implementation until mid-2027. The decision marks the latest signal that Washington is seeking to stabilize ties with China and preserve the trade deal struck between President Donald Trump and Chinese President Xi Jinping.
Credit：USTR
The Office of the U.S. Trade Representative (USTR) on Tuesday released findings of a nearly yearlong inquiry into China's chip sector, concluding that Beijing engaged in "unreasonable" trade practices that burden U.S. commerce. The announcement sets an initial tariff rate of zero percent, effective December 23, 2025, with the rate scheduled to increase June 23, 2027, to be announced at least 30 days prior.
Liu Pengyu, spokesperson at the Chinese embassy in Washington, responded that China remains opposed to the "abuse of tariffs." He warned that efforts to "politicize, instrumentalize and weaponize trade and tech issues" will benefit no one. "We will take all measures necessary to firmly safeguard our lawful rights and interests," Liu said.
The decision creates potential leverage for Trump should his tariff deal with Xi collapse while avoiding immediate escalation. The announcement comes as the administration has launched a review that could result in the first shipments of Nvidia's second-most powerful AI chips to China, despite concerns from China hawks.
Investigation Targets Legacy Chip Dominance
USTR's Federal Register notice concluded that China "has employed increasingly aggressive and sweeping non-market policies" to bolster its semiconductor industry and create foreign dependency on its products in ways that disadvantage U.S. commerce. The finding makes China's actions "actionable" under Section 301 trade law.
The investigation, launched last December under then-President Joe Biden, was legally required to publish results within 12 months. Biden had separately ordered the tariff rate on Chinese semiconductors to double to 50 percent by end of 2025 under another Section 301 probe. The new tariff line would be additional to existing Section 301 duties.
Tuesday's announcement focuses on foundational chips—also known as legacy or mature-node semiconductors—made in China. While less advanced than chips driving artificial intelligence, the older technology is ubiquitous across applications including autos, airplanes, medical devices and telecommunications. Products covered include diodes, transistors, raw silicon and electronic integrated circuits, but not finished products containing Chinese chips.
Nvidia H200 Shipments Complicate Landscape
The tariff announcement came a day after Reuters reported that Nvidia informed Chinese clients it plans to begin H200 shipments before mid-February, targeting deliveries before the Lunar New Year. The company is preparing initial deliveries of 5,000 to 10,000 chip modules—equivalent to roughly 40,000 to 80,000 H200 chips—pending Beijing's approval.
Senator Elizabeth Warren and Representative Gregory Meeks on Monday demanded the Commerce Department disclose all license applications for H200 chips destined for Chinese companies within 48 hours of approval. The Democratic lawmakers also requested details on the military potential of chips cleared for export and allied reactions to the decision.
The H200, part of Nvidia's previous-generation Hopper line, offers roughly six times the processing power of Nvidia's downgraded H20 chip designed for the Chinese market. Trump announced December 8 that the chips would only go to "approved customers" vetted by the Commerce Department, with sales subject to a 25 percent fee. The arrangement extends to Intel Corp. and Advanced Micro Devices Inc. (AMD).
Trade Truce Constrains Administration's Options
The decision to hold off on imposing tariffs reflects Trump's efforts to solidify the deal struck with Xi in October in South Korea. Under that agreement, Washington and Beijing agreed to stave off astronomical tariffs and relax export restrictions on technology and critical minerals. As part of negotiations, Washington pushed back a rule restricting U.S. tech exports to units of blacklisted Chinese companies.
USTR noted it "will continue to monitor the efficacy of this action, the progress made toward resolution of this matter, and the need for any additional action." By preserving the option to hike duties later, Trump maintains leverage should the agreement collapse.
U.S. and European authorities have grown increasingly concerned that China holds excessive sway over the legacy chip supply chain. Those concerns lie at the center of a dispute between the Netherlands and China over Nexperia Holding BV, a Chinese-owned chipmaker providing critical auto industry components that Dutch authorities briefly attempted to seize on national security grounds in October.
The chip industry also awaits the administration's decision on a broader Section 232 national security investigation into global chip imports, which could impose more tariffs on Chinese semiconductors and electronics containing them from all countries. U.S. officials are privately indicating they might not levy them soon, Reuters reported.
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