Former President Donald Trump and Vice President Kamala Harris recently faced off in their first presidential debate, clashing on issues such as the US chip supply to China and the ongoing trade war.
Harris signaled that, if elected, she would likely continue the Biden administration's strategy of working with allies to escalate restrictions on chip exports to China.
She stressed that the US must maintain its competitive edge over China. Trump, meanwhile, advocated for raising tariffs, though he didn't rule out continuing Biden's policies of restricting chip technology exports.
Such continuity is not dissimilar to Biden maintaining the tariffs Trump introduced during his administration. Both candidates acknowledged that the current geopolitical tensions between the US and China make it unlikely for any future president to reverse course.
The Trump to Biden trade war pipeline
During the debate, Harris criticized Trump for initiating the tariff war with China. However, this indirectly goes against the Biden administration's decision to continue raising tariffs on Chinese goods.
In mid-May 2024, Biden announced additional tariffs on key Chinese products such as semiconductors, electric vehicles (EVs), batteries, solar panels, steel, aluminum, and critical minerals. These tariffs, which build upon Trump's trade war, are expected to affect about US$18 billion worth of Chinese imports annually.
To protect the Chips and Science Act passed during Biden's term and curb China's rapid expansion of mature chip manufacturing, the current administration doubled tariffs on Chinese semiconductor imports from 25% to 50%, which would go into effect in 2025.
Similarly, tariffs on Chinese EVs are set to rise from 27.5% to 102.5% by 2024, a response to the increasing threat posed by China's technological advancements in the EV sector.
Post-pandemic supply chain reflections trigger US-China tech war
Harris also attacked Trump's administration for continuing to sell US chips to China, which she claimed aided China's military modernization. Trump responded by asserting that Taiwan, not the US, sold those chips, and he attributed the US's lack of domestic chip production to Democratic policies.
Both candidates are vying to shape the future of US-Taiwan chip supply to China. Harris suggested that under Biden, the US has taken unprecedented measures to restrict key technology exports to China, something Trump failed to do.
However, the circumstances surrounding the US-China trade war under Trump and Biden differ significantly. Had Trump been re-elected in 2020, he likely would have imposed similar restrictions on chip and semiconductor technology exports to China.
Biden took office at the start of the post-pandemic era in 2021, a time when the US and Europe began reevaluating the risks posed by global supply chain disruptions, especially the over-reliance on China.
The pandemic, coupled with China's growing political and economic power, led the Biden administration to strengthen export controls and introduce legislation like the Chips Act and the Inflation Reduction Act (IRA) to rebuild America's domestic manufacturing capacity.
These bipartisan policies were designed to mitigate reliance on Chinese supply chains. There is little reason to believe that a re-elected Trump administration would not have implemented similar measures, though the details of the sanctions may have varied.
US lags behind, more export controls to be expected
Trump's comment about Taiwan selling chips to China is technically accurate, as most of the US's high-end chips are manufactured in Taiwan. However, Trump needs to recognize that US sanctions on chip exports to China are deeply intertwined with Taiwan's chip manufacturing supply chain, and decisions still ultimately rest with the White House.
Should Trump win the presidency, he will need to pay close attention to Taiwan's supply chain to make informed decisions regarding his China strategy.
If Harris is elected, she will need to continue evaluating how to prevent the US' cutting-edge chips from getting into Chinese hands while maintaining America's competitive edge. Currently, the US is showing signs of lagging behind China in smartphone and EV technology. In some emerging sectors such as flying cars and drones, China's development has been notably rapid.
Going forward, the US must maintain its leadership in semiconductors to have a long-term technological edge over China.
