Biden is Trapping Trump by Sanctioning Chinese Chips

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In December last year, The New York Times claimed that Donald Trump holds a strong hand, suggesting that he would win a potential trade war with China. However, his predecessor won’t allow that to happen:
January 17, 2025
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November 2024,Joe Biden welcomes Donald Trump back to White House

Joe Biden is finally leaving the White House. But before his retirement, he left a farewell gift——a lethal trap for his successor Donald Trump. On the surface, it appears to be a new crackdown on Chinese chip manufacturing. In reality, it includes two bombs Biden has tied to America’s economy and diplomacy.

The first bomb, which began its countdown in Biden’s final month in office, could cripple the U.S. manufacturing sector, which heavily relies on chips.

On December 23, 2024, the Office of the United States Trade Representative (USTR) launched a Section 301 investigation into what it called “overcapacity” in China’s chip exports. Notably, this investigation took place after the outcome had effectively been predetermined: three months earlier, the USTR had already announced plans to double tariffs on Chinese chips in 2025. Therefore, the investigation has little impact on China.

The USTR launched a section 301 into China’s chip exports.

However, this investigation, now passed on to the Trump administration, could deal a heavy blow to American manufacturing. While the U.S. can produce cutting-edge 5nm chips, a 2022 Commerce Department survey found that what U.S. manufacturers lack most are chips produced using mature processes—those above 40nm. And in this area, the U.S. is highly reliant on Chinese exports.

According to the Bureau of Industry and Security (BIS), more than two-thirds of American products may contain chips made in China. Among surveyed manufacturers, 72% said Chinese suppliers offer lower prices, and are difficult to replace. For example, microcontroller (MCU) chips—a common type of mature-process chip—are found in everything from electric toothbrushes to vehicles and industrial robots. While China, the U.S., and Europe all produce MCUs, Chinese chips cost as little as $1, compared to at least $5 for their American or European counterparts.

A microcontroller or microcontroller unit (MCU) is a small computer on a single integrated circuit.

Slapping tariffs on irreplaceable Chinese chips will only raise costs for American suppliers, further eroding the competitiveness of U.S. manufacturing. For Trump and Elon Musk, who are championing the return of manufacturing to the U.S., this is anything but good news.

The second bomb, set off just ten days before Biden’s departure, directly threatens America’s leading industry: artificial intelligence.

On January 9, 2025, Biden proposed stricter restrictions on NVIDIA’s chip exports to China, aiming to curb the development of Chinese AI technologies. To China, this policy seems almost laughable. Just a month earlier, on December 10, 2024, China had launched an antitrust investigation into NVIDIA, causing the American tech giant’s stock to plummet, wiping out $100 billion in market value overnight.

China’s antitrust move sent a clear signal: it no longer depends on the U.S. for advanced GPU chips. Years of innovation have enabled China’s semiconductor industry to overcome its shortcomings and challenge U.S. dominance in advanced chips. By 2024, China’s domestically produced DUV lithography machines had achieve 8nm overlay precision, sufficient to manufacture GPU chips capable of competing with NVIDIA. Meanwhile, Chinese firms such as Moore Threads and China Telecom developed tools for AI training and advanced networking technologies. For Chinese tech companies, NVIDIA has become replaceable.

Even NVIDIA itself opposed Biden’s proposal, warning that further restrictions on exports to China would “threaten economic growth and America’s leadership.” However, Washington’s political elite seems deaf to such warnings. Instead, they are leveraging the “China threat” narrative to pressure allies in the Arab world. In a letter to Commerce Secretary Gina Raimondo, Representatives John Moolenaar and Raja Krishnamoorthi from the House Committee on the Chinese Communist Party expressed concerns over China’s ties with the United Arab Emirates (UAE). They argued that any country using Huawei’s cloud computing equipment should face restrictions and claimed that U.S. AI technology offers an opportunity to “pry both companies and countries out of Beijing’s orbit.”

What Moolenaar may not realize is that Huawei’s data centers are a key supplier for Converge ICT Solutions, a Philippine telecom company that serves 54% of Filipino households. Would the U.S. restrict its most critical military ally in the region as well? This conundrum, created by Biden’s policy, is now Trump’s problem to solve.

Converge and Huawei sign MoU

By imposing these two sanctions on Chinese chips, Biden has effectively double-checked his successor. If Trump maintains the sanctions, American manufacturing will collapse. If he revokes them, he risks being branded a coward who surrender to China, taking the blame for Biden’s failure in the chip war.

On the other hand, regardless of Trump’s next move, over half of U.S. manufacturing has already been abandoned to a wholly unnecessary supply chain crisis.

Editor: Li Jingyi

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