U.S.–China Trade War Heats Up: Tariffs Target Tech and Electronics

Trade War

The U.S.–China trade relationship is once again in the global spotlight as tensions escalate through a new wave of tariff actions and investigations. While both countries remain locked in a retaliatory tariff cycle, recent developments indicate that the U.S. is expanding its trade enforcement strategy beyond broad-based tariffs, targeting strategic industries like semiconductors, pharmaceuticals, and critical minerals.

Spotlight on Semiconductors: The Centerpiece of a New Trade Clash

On April 16, the U.S. Department of Commerce officially launched a Section 232 national security investigation into semiconductors and semiconductor-containing products. This investigation—framed under the Trade Expansion Act of 1962—seeks to determine whether the U.S.’s dependence on foreign-made chips poses a national security risk.

China is a key player in this space, both as a supplier and as a target of the Biden and Trump administrations’ efforts to rebuild domestic manufacturing capacity. While China already faces reciprocal tariffs and Section 301 duties, the outcome of this investigation could introduce sector-specific tariffs on an even broader range of electronic products.

What’s at Stake:

  • Semiconductors are used in everything from smartphones to defense systems.
  • Downstream goods like computers, EVs, smartphones, and microelectronics.
  • U.S. national security, as policymakers seek to curb dependency on foreign chip supply chains—particularly from China.

Commerce is accepting public comments until May 7, with a statutory deadline of 270 days to report findings. However, accelerated action is expected, which means tariff impacts could begin hitting importers as early as this summer.

Electronic Tariff Relief… For Now

In a seemingly contradictory move, President Trump recently granted temporary relief from reciprocal tariffs for key Chinese-origin electronic goods—including laptops and smartphones—by expanding the “Annex II” exclusion list. This exemption took effect retroactively from April 5, allowing importers to request refunds on eligible entries.

However, this relief is likely short-lived. The same electronics may soon be targeted by the semiconductor investigation’s eventual tariff recommendations, potentially negating the temporary benefit.

A Tactical Pause:

  • Relief appears strategic: softening short-term economic blow while long-term enforcement builds.
  • Tariffs could return under Section 232, bypassing reciprocal tariff exemptions.
  • Businesses must monitor the investigation closely and prepare for new compliance costs.

 IEEPA, Section 232, and the Rules of Engagement

China remains subject to multiple overlapping tariff regimes, including:

  • IEEPA Tariffs: Emergency powers used to target Chinese-origin goods across broad categories.
  • Section 301 Tariffs: Originally imposed in response to China’s unfair trade practices and IP theft.
  • Section 232 Tariffs (newly proposed): Focused on national security risks from import dependence.

Unlike IEEPA or Section 301, Section 232 requires a formal investigation, and a presidential decision based on Commerce’s findings. However, goods targeted under Section 232 will be exempt from reciprocal tariffs, creating a shifting tariff landscape that will require importers to continuously re-evaluate supply chain strategies.

The Supply Chain Impact: Short-Term Volatility, Long-Term Realignment

If semiconductors and electronics are hit with new tariffs under Section 232, businesses relying on Chinese manufacturing will face:

  • Higher costs for components and finished goods.
  • Compliance complexity across overlapping tariff programs.
  • Uncertainty regarding transit exemptions, country-of-origin rules, and retroactive tariff relief.

What Businesses Should Do:

  • Review country of origin documentation carefully—tariff rates depend on it.
  • Consider tariff engineering and alternative sources where possible.
  • Monitor investigation timelines and comment opportunities (such as the May 7 deadline for public input).
  • File for refunds on eligible electronics that qualify under the Annex II exemption.

Strategic Takeaway

This new phase of the U.S.–China trade conflict is more surgical and sector-driven than previous waves. Semiconductors and critical technologies are no longer just economic assets, they are national security priorities. As the Biden administration and former President Trump’s policies converge on protecting U.S. tech dominance, businesses should expect deeper scrutiny, tighter controls, and faster enforcement.

Staying ahead means staying informed.