December 06, 2024
How the Chip War Could Turn Under Trump
What does the return of Donald Trump imply for the global chip war? Trump didn’t start the subsidy race — credit here goes to Chinese leader Xi Jinping — but his first administration focused the US on tech competition with China. Biden then extended Trump-era policies regarding tariffs, subsidies, and export controls. Now Trump is returning just as artificial intelligence intensifies demand for computing power.
For the chip industry, the immediate focus is tariffs. Trump’s first term drove the sector towards a costly supply chain restructuring, with electronics assembly shifting from China to Mexico and south-east Asia. More tariffs on China are certainly coming. But some south-east Asian countries whose electronics exports have driven higher trade surpluses with the US are also in the crosshairs.
If the new Trump administration wants to reset chip policy — and if it wants visible results within four years — it had better start soon.
Yet not every US chip company opposes every type of tariff. To protect industry segments impacted by heavily subsidised Chinese competitors, Washington is exploring “component tariffs” — that is, taxing imports based not on the location of final assembly but on the components inside. Today, a device assembled in Vietnam containing Chinese chips pays the tariff rate for Vietnam, not China. A component-based tariff regime would target Chinese chips, regardless of where final assembly occurs. Such a policy would fit Trump’s desire to tackle Chinese subsidies with more limited cost to companies and consumers than broad-based tariffs.
Export controls on US companies shipping AI chips and chipmaking tools to China were another Biden expansion of a Trump-initiated policy. It was Trump who first targeted Huawei. The Biden administration has since cut exports to over a hundred companies it says are Huawei-affiliated. It was Trump who worked with the Dutch government to ban sales of cutting-edge lithography machines to China; Biden expanded those restrictions.
Read the full article on Financial Times.
More from CNAS
-
Rational Security: The “Adverse Possession” Edition
Podcast
This week, Scott sat down with Lawfare Managing Editor Tyler McBrien and Contributing Editor and CNAS adjunct senior fellow Alex Zerden to talk through a few of the week’s big...
By Alex Zerden
-
What if 'America First' Appears to Work? With Tom Wright
Podcast
Tom Wright joins to talk about his recent article, “What if 'America First' Appears to Work?" about the Trump administration’s “might makes right” approach to foreign policy, ...
By Emily Kilcrease & Geoffrey Gertz
-
Commentary
Transatlantic Security / Technology & National Security
Look Before We Leap on Artificial IntelligenceThis article was originally published on The Dispatch. A debate about the role that artificial intelligence should and will play in society, and how it will affect humanity fo...
By Jon B. Wolfsthal
-
Economic Security in North America
Reports
Executive Summary The United States, Mexico, and Canada Agreement (USMCA) negotiated during President Donald Trump’s first term includes a novel review clause. By July 2026, t...
By Emily Kilcrease & Geoffrey Gertz
