Notice2025-23912
Notice of Action: China's Acts, Policies, and Practices Related to Targeting of the Semiconductor Industry for Dominance
Primary source
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Published
December 29, 2025
Issuing agencies
Trade Representative, Office of United States
Abstract
The United States Trade Representative (U.S. Trade Representative) has determined that China's acts, policies, and practices are actionable under Section 301 of the Trade Act of 1974 and that appropriate responsive action includes taking tariff action now on semiconductors from China, with an initial tariff level of 0 percent, increasing in 18 months on June 23, 2027, to a rate to be announced not fewer than 30 days prior to that date, as described below.
Full Text
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<title>Federal Register, Volume 90 Issue 245 (Monday, December 29, 2025)</title>
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[Federal Register Volume 90, Number 245 (Monday, December 29, 2025)]
[Notices]
[Pages 60848-60850]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-23912]
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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
Notice of Action: China's Acts, Policies, and Practices Related
to Targeting of the Semiconductor Industry for Dominance
AGENCY: Office of the United States Trade Representative.
ACTION: Notice of action.
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SUMMARY: The United States Trade Representative (U.S. Trade
Representative) has determined that China's acts, policies, and
practices are actionable under Section 301 of the Trade Act of 1974 and
that appropriate responsive action includes taking tariff action now on
semiconductors from China, with an initial tariff level of 0 percent,
increasing in 18 months on June 23, 2027, to a rate to be announced not
fewer than 30 days prior to that date, as described below.
DATES: December 23, 2025: The effective date of the action.
FOR FURTHER INFORMATION CONTACT: Philip Butler, Chair of the Section
301 Committee or Nathaniel Halvorson, Deputy Assistant U.S. Trade
Representative for Monitoring & Enforcement at (202) 395-5725.
SUPPLEMENTARY INFORMATION:
I. Background
On December 23, 2024, the U.S. Trade Representative initiated a
section 301 investigation of China's acts, policies, and practices
related to targeting of the semiconductor industry for dominance,
including to the extent that China's semiconductors are incorporated as
components into downstream products for critical industries like
defense, automotive, medical devices, aerospace, telecommunications,
and power generation and the electrical grid.\1\ The U.S. Trade
Representative also requested consultations with the Government of
China pursuant to Section 303 of the Trade Act (19 U.S.C. 2413). The
Government of China declined to hold consultations regarding the
investigation under this statutory framework. The notice of initiation
solicited written comments on, inter alia:
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\1\ 89 FR 106725 (Dec. 30, 2025).
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<bullet> China's acts, policies, and practices related to its
targeting of the semiconductor industry for dominance.
<bullet> Anticompetitive and non-market means employed by the PRC
in pursuit of its semiconductor industry targeting objectives,
including political guidance, directives, and control within state and
private enterprises, activities of state-owned or state-controlled
enterprises, market access restrictions, opaque regulatory preferences
and discrimination, wage-suppressing labor practices, massive state
support of industry (including government guidance funds), and forced
technology transfer (including state-directed cyber intrusions and
cybertheft of intellectual property).
<bullet> Whether China's acts, policies, and practices are
unreasonable or discriminatory.
<bullet> Whether China's acts, policies, and practices burden or
restrict U.S. commerce, and if so, the nature and level of the burden
or restriction. This would include economic assessments of the burden
or restriction on semiconductors, semiconductor manufacturing including
foundries, silicon carbide substrates or other wafers, and downstream
products, with a particular focus on critical industries, such as
defense, automotive, medical devices, aerospace, telecommunications,
and power generation and the electrical grid.
<bullet> Whether China's acts, policies, and practices are
actionable under section 301(b) of the Trade Act, and what action, if
any, should be taken, including tariff and non-tariff actions.
Interested persons filed 26 comments. In addition, USTR and the
Section 301 Committee convened a public hearing on March 11, 2025,
during which witnesses provided testimony and responded to questions.
The public submissions are available at: <a href="https://comments.ustr.gov/s/">https://comments.ustr.gov/s/</a>
in docket number USTR-2024-0024, and a transcript of the hearing is
available on USTR's website.
II. Determination of Actionability
Based on information obtained during the investigation, and in
consultation with the Section 301 Committee, China's targeting of the
semiconductor industry for dominance is unreasonable and burdens or
restricts U.S. commerce and thus is actionable.
For decades, China has targeted the semiconductor industry for
dominance and has employed increasingly aggressive and sweeping non-
market policies and practices in pursuing dominance of the sector.
China's pursuit of its dominance goals has severely disadvantaged U.S.
companies, workers, and the U.S. economy generally through lessened
competition and commercial opportunities and through the creation of
economic security risks from dependencies and vulnerabilities.
Top-down industrial planning is a critical feature of China's
state-led, non-market economic system. China organizes the development
of its economy through broad, national-level five-year economic and
social development plans. It then employs industry-specific plans and
local plans at central and sub-central levels of government that
typically align chronologically with the national five-year plans.
These plans often contain detailed quantitative and qualitative
targets, including for production, domestic content, domestic and
international market shares, and outline the non-market policies and
practices China should use to achieve these targets.
Over the last 25 years, China has promulgated over 100 central and
sub-central industrial plans that address the semiconductor industry,
articulating over 300 qualitative and 170 quantitative targets that
seek to capture global and domestic market share, transfer technology,
and indigenize the equipment needed to manufacture semiconductors. In
its last publicly-released market share target for the semiconductor
sector, China aimed to capture 56 percent of sales in the international
market and 80 percent in the domestic market, according to industrial
plans. Market share targets necessitate substitution by Chinese
companies at the expense of foreign competitors--for Chinese companies
to gain market share, they must displace foreign companies in existing
markets and take new markets as they develop in the future. Across both
qualitative and quantitative targets, China's industrial plans target
every major segment of the semiconductor supply chain, including
fabrication; design; assembly, testing, and packaging (ATP); and
materials & equipment.
Unreasonable Acts, Policies, and Practices
In particular, the U.S. Trade Representative has determined that
China's targeting of the semiconductor industry for dominance is
unreasonable, including for the following reasons:
First, China's targeting of the semiconductor industry is
unreasonable because China exerts extraordinary control over the
semiconductor industry, and other economic actors, in order to achieve
its targeted dominance, including through political guidance,
directives, and control within state and private enterprises,
activities of state-owned or state-controlled enterprises. Adherence to
the objectives of China's industrial plans is effectively mandatory.
Both state actors and Chinese companies move toward the goals set by
the central government and have little discretion to ignore China's
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industrial targets. The Chinese Communist Party also exerts control
through personnel and enterprise structures. China's control over
economic actors enables China to direct and influence their commercial
behavior in pursuit of its targeted dominance, in ways that run counter
to fair competition and market-oriented principles.
Through its control of economic actors and sectors, China directs
non-market advantages to China's semiconductor industry across every
major segment of the semiconductor supply chain, including fabrication,
design, ATP, materials, critical minerals, chemicals, photoresists, and
manufacturing equipment. These non-market advantages include massive
and persistent state financial support of industry, including market
access restrictions and direction; government guidance funds; forced
technology transfer and intellectual property theft; opaque regulatory
preferences and discrimination; and wage-suppressing labor practices.
Thus, China's targeting of the semiconductor industry for dominance is
unreasonable because of China's extraordinary control over its economic
actors and ability to direct non-market advantages to its semiconductor
industry.
Second, China's targeting of the semiconductor industry for
dominance is unreasonable because it is does not reflect market
competition and is unconstrained by market forces. China's targeting,
both by design and in effect, displaces foreign firms, deprives market-
oriented businesses and their workers of commercial opportunities, and
lessens competition. China's plans, including as demonstrated by
specific market share targets, are to achieve a long-term dominant
position in these economic sectors. Its targeting of the industry for
dominance necessarily means displacing foreign firms from existing
markets, and taking new markets as they arise, diminishing competition.
Foreign firms are increasingly unable to compete with the resources of
the Chinese state, resulting in lost sales, under-investment in
capacity, diminished ability to attract financing, and lost jobs and
lower wages. The dominant positions China seeks, and increasingly
achieves, in numerous segments of the semiconductor industry give it
market power over global supply, pricing, and access.
Third, China's targeting of the semiconductor industry for
dominance harms foreign competitors and purchasers by creating and
exploiting dependencies. China's objective is to ultimately displace
foreign competitors throughout the semiconductor value chain in
domestic and foreign markets, which increases the world's dependence on
its companies, products, services, and technology. The creation of
dependencies also increases risk for individual firms and their
workers, for economic sectors (including workers' communities), and for
supply chain resilience. China has demonstrated in the past its
willingness to weaponize dependencies for purposes of economic
coercion, including in this sector through export restrictions on
gallium, germanium, antimony, and other critical minerals. China has
applied these export restrictions broadly without regard to end-use or
end-users. China's targeting of this sector for dominance is therefore
unreasonable also due to the creation of dependencies and resulting
vulnerabilities and risks.
Burden or Restriction on U.S. Commerce
Furthermore, the U.S. Trade Representative determined that China's
targeting of the semiconductor industry for dominance burdens or
restricts U.S. commerce, including for the following reasons:
First, China's targeted dominance burdens or restricts U.S.
commerce because it undercuts business opportunities for and
investments in the U.S. semiconductor industry. China has targeted the
semiconductor industry for dominance for decades and increasingly
dominates segments of the semiconductor value chain. Indeed, China
continues to build upon its dominance and seeks to expand into new
segments of the value chain. China's targeting for dominance
contributes to lost sales, chronic underinvestment in numerous
segments, and a diminished U.S. industry, constituting a burden and
restriction on U.S. commerce.
Second, China's targeting for dominance burdens or restricts U.S.
commerce because it creates economic security risks from dependence and
vulnerabilities in sectors critical to the functioning of the U.S.
economy. China's targeting for dominance has created, and will continue
to accelerate, dependencies for the U.S. semiconductor industry and for
purchasers of semiconductors, creating vulnerabilities across the U.S.
economy. China has also revealed the capacity and willingness to
weaponize dependencies and vulnerabilities through economic coercion.
Over-reliance on a single economy for semiconductors and related
technology or products increases the cost of any disruption. The
economic security risks U.S. firms and the U.S. economy bear from these
dependencies and vulnerabilities, through their potential for
disruption and coercion, burden or restrict U.S. commerce.
III. Determination of Appropriate Action
Section 301(b) provides that upon determining that the acts,
policies, and practices under investigation are actionable and that
action is appropriate, the U.S. Trade Representative shall take all
appropriate and feasible action authorized under Section 301(c),
subject to the specific direction, if any, of the President regarding
such action, and all other appropriate and feasible action within the
power of the President that the President may direct the U.S. Trade
Representative to take under Section 301(b), to obtain the elimination
of that act, policy, or practice. Section 301(c) of the Trade Act
authorizes the U.S. Trade Representative to take certain actions for
purposes of carrying out the provisions of Section 301(b). For example,
Section 301(c)(1)(B) authorizes the U.S. Trade Representative to
``impose duties or other import restrictions on the goods of [the
foreign country subject to the investigation] and, notwithstanding any
other provision of law, fees or restrictions on the services of, such
foreign country for such time as the Trade Representative determines
appropriate.'' Section 301(c)(3)(A) provides that actions that the U.S.
Trade Representative is authorized to take may be taken against any
good or economic sector on a non-discriminatory basis or solely against
the foreign country concerned.
Pursuant to Sections 301(b) and (c), the U.S. Trade Representative
has determined that responsive action is appropriate and that
appropriate responsive action includes taking tariff action now on
semiconductors from China, with an initial tariff level of 0 percent,
increasing in 18 months on June 23, 2027, to a rate to be announced not
fewer than 30 days prior to that date. These new Section 301 tariffs
would be additional to the existing 50 percent Section 301 tariff on
semiconductors from China imposed pursuant to the Section 301
investigation related to forced technology transfer. The U.S. Trade
Representative will continue to monitor the efficacy of this action,
the progress made toward resolution of this matter, and the need for
any additional action.
This action applies to the following 8-digit subheadings:
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Tariff code HS description
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28046100............................. Silicon containing by weight not
less than 99.99 percent of
silicon.
38180000............................. Chemical elements doped for use
in electronics, in the form of
discs, wafers etc., chemical
compounds doped for electronic
use.
85411000............................. Diodes, other than photosensitive
or light-emitting diodes.
85412100............................. Transistors, other than
photosensitive transistors, with
a dissipation rating of less
than 1 W.
85412900............................. Transistors, other than
photosensitive transistors, with
a dissipation rating of 1 W or
more.
85413000............................. Thyristors, diacs and triacs,
other than photosensitive
devices.
85414910............................. Other photosensitive
semiconductor diodes, other than
light-emitting.
85414970............................. Photosensitive transistors.
85414980............................. Photosensitive semiconductor
devices nesoi, optical coupled
isolators.
85414995............................. Other photosensitive
semiconductor devices, other
than diodes or transistors,
nesoi.
85415100............................. Other semiconductor-based
transducers, other than
photosensitive transducers.
85415900............................. Other semiconductor devices,
other than semiconductor-based
transducers, other than
photosensitive devices, nesoi.
85419000............................. Parts of diodes, transistors,
similar semiconductor devices,
photosensitive semiconductor
devices, LED's and mounted
piezoelectric crystals.
85423100............................. Electronic integrated circuits:
processors and controllers.
85423200............................. Electronic integrated circuits:
memories.
85423300............................. Electronic integrated circuits:
amplifiers..
85423900............................. Electronic integrated circuits:
other.
85429000............................. Parts of electronic integrated
circuits and microassemblies.
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In order to implement the Trade Representative's determination,
subchapter III of chapter 99 of the Harmonized Tariff Schedule of the
United States (HTSUS) is modified by the Annex of this notice,
effective December 23, 2025.
Products of China that are provided for in HTSUS heading 9903.91.05
and described in subdivision (f)(ii) of note 31 to subchapter III of
chapter 99 of the HTSUS, as established by the Annex of this notice,
shall continue to be subject to antidumping, countervailing, or other
duties, fees, exactions and charges that apply to such products. Any
product covered by the Annex to this notice, except any product that is
eligible for admission under `domestic status' as defined in 19 CFR
146.43, which is subject to the additional duty imposed by this
determination, and is admitted into a U.S. foreign trade zone on or
after the effective date of the additional duties only may be admitted
as `privileged foreign status' as defined in 19 CFR 146.41. Such
products will be subject upon entry for consumption to any ad valorem
rates of duty or quantitative limitations related to the classification
under the applicable HTSUS subheading.
Annex
Subdivision (f) of U.S. note 31 to subchapter III of chapter 99 of
the Harmonized Tariff Schedule of the United States is amended:
1. by deleting ``Heading 9903.91.05'' and by inserting ``(i)
Heading 9903.91.05'' in lieu thereof; and
2. by inserting the following in numerical order:
``(ii) The additional rate of duty under heading 9903.91.05 shall
be increased on June 23, 2027. The U.S. Trade Representative will
announce the amount of the increase in a Federal Register notice that
is issued at least 30 days prior to that date.''
Jennifer Thornton
General Counsel, Office of the United States Trade Representative.
[FR Doc. 2025-23912 Filed 12-23-25; 8:45 am]
BILLING CODE 3390-F4-P
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