SIA the American semiconductor industry group has submitted a letter to the Office of the United States Trade Representative (USTR) in December. 1 urging the removal of the harmful tariffs on semiconductors which have been causing ongoing shortages of chips and causing a slowdown in economic growth in the U.S. Economy.
According to the SIA in their submission, the 301 tariffs that were imposed on semiconductors and related products have resulted in an acute shortage of chips across the world, and have caused prices to rise, causing additional negative consequences for US customers and manufacturers who buy and manufacture electric appliances, automobiles medical equipment, as well as other US industrial and technological products.
Semiconductors constitute the backbone of our modern economy. They drive all digital devices from smartphones and cars, as well as computers and medical equipment. American chipmakers account for more than half of their market share across the world. In 2020, US semiconductor exports surpassed the US $49 billion mark, making the industry of chip manufacturing among the five top US manufacturing industries that export. Additionally that, the US semiconductor industry also has a surplus of exports to China. Most of the manufacturing factories that are part of US manufacturers of semiconductors are within 18 different states. It is believed to be that the US semiconductor industry employs 277000 American employees in highly-paying positions and creates an additional 1.6 million positions in America. US economy.
SIA has stated that the appearance of the new coronavirus infection along with the increase in shortages of core components that are spreading across the world have caused enormous problems for the entire semiconductor industry and many challenges in the global semiconductor industry. Section 301 has led to the disruption of the global semiconductor supply chain along with the increasing prices. SIA stated that the introduction of the US of the Section 301 tax has raised the price for electronic parts across the United States by 25% and caused an imbalance between demand and supply and also caused costs for semiconductors to rise and further created an imbalance between the producers of semiconductors and the consumers in the United States, factories have been shut down and companies are under the threat of losing jobs or reductions in staff.
Furthermore, SIA mentioned that semiconductor devices are the basis of a variety of medical devices. They are the main tool to fight COVID-19. The elimination of Section 301 taxation will ensure that medical devices are available that can aid in fighting against COVID-19.
About Section 301
In the context of the Biden Administration's extensive investigation of U.S. policy towards China according to Section 301, the United States currently has penalties that range from 25 percent on more than $300 billion worth of Chinese imports. China as well as those tariffs. Section 301 tariffs are in addition to the normal taxes on imports. USTR implemented these tariffs following studying China's intellectual property laws, as well as technology transfer policies and practices and publishing a report at the beginning of the year. USTR announced these Section 301 tariffs in four tranches which started in July of this year. They are in force until today.