THE U.S. semiconductor industry bristled at President Donald Trump’s plan to impose tariffs on about $50 billion of Chinese goods, arguing they will hurt American business and make the country less competitive.
The rules, which take effect July 6, will place 25% tariffs on a variety of goods including semiconductors and related product imports, products brought into the U.S. that amounted to $2.5 billion in 2017, according to the Semiconductor Industry Association, a U.S. trade group.
A second set of tariffs, which would take effect at a later date, includes additional semiconductors and related products—and that impact is more extensive, including a wider collection of components in chips than the original list, the group said. The trade group said it was still determining the financial impact.
China, in a retaliatory move, said it would impose tariffs of 25% on U.S. products including autos, agriculture and seafood.
Chip makers feel as if they are in the middle of a “game of chicken,” said Robert Maire, president of the consulting firm Semiconductor Advisors. They have viewed the escalating trade battle warily so far, and today’s news likely hasn’t changed that position, he said.
Many chip makers are loath to wade into the debate for fear of stoking tensions, which could hurt their stocks or rile the Trump administration, Mr. Maire said, but there is a built-in assumption the U.S. and China will work it out.
On Wall Street, the stocks of semiconductor companies saw only muted impact on the news, tracking the broader market. Shares of Intel Corp. finished down less than a percent, while Qualcomm Inc. closed marginally higher.
The U.S. orders cut across an array of goods, trade-group representatives said, such as hard drives used in servers and storage devices, as well as monitoring and testing equipment used to develop new products.
In its order, the U.S. said its list “does not include goods commonly purchased by American consumers such as cellular telephones or televisions.”
The Information Technology Industry Council, though, cautioned that the tariffs going into effect July 6 include items such as light-emitting diodes and hard drives. That could end up boosting consumer prices for things like computers and mobile phones, the trade group said.
The U.S. order said companies can still seek exclusions for some products from the duties. Hearings for the second group of tariffs are expected to take place July 24.
While the U.S. tariffs may impair Chinese companies that use semiconductors, among others, the fallout also will extend to U.S. businesses that participate in the complex supply chain of chip manufacturing, the Semiconductor Industry Association said.
That is because most chips American companies import from China are designed in the U.S. The manufacturing of many components in those chips often starts in the U.S. as well, before they are shipped to China for assembly, testing and packaging.
The tariffs will force American companies to pay duties on their own products, some of which were initially built in the U.S., the trade group said, adding that the imposition “fails to address the serious IP and industrial policy issues in China.”
While the trade group didn’t cite specific Chinese transgressions, U.S. Trade Representative Robert Lighthizer called out “China’s theft of our intellectual property, the forced transfer of American technology, and its cyberattacks on our computer networks” in announcing the order.
The tariffs, meanwhile, throw further doubt on the fate of Qualcomm’s long-running $44 billion acquisition of Dutch automotive chip specialist NXP Semiconductors NV, another sign of how U.S. efforts to tackle trade complaints with China can risk blowback for U.S. companies.
The NXP deal has awaited Chinese regulators’ approval, but that approval has been in limbo as the U.S. and China engaged in a skirmish over trade as well as Washington’s ban on Chinese telecom ZTE Corp. buying components from American suppliers. - WSJ
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