It is very interesting how the current situation between China and the United States is unfolding — the U.S. is trading time for space, while China is trading space for time.

At the same time, the U.S. has reached a point where it must "conserve its ammunition," because Trump increasingly realizes that their resources are running thin in the competition with China.

Over the years, whether through Section 301 investigations or under the pretext of national security, the U.S. has imposed numerous barriers against Chinese manufacturing. However, the tariff barriers against Chinese semiconductors are particularly special.

The chip Section 301 investigation initiated by Biden in his final days will end on December 23, 2025. The U.S. has determined that China's industrial policies and practices in the chip sector harm American commercial interests and constitute conditions for implementing trade retaliation.

Using this as an excuse, the U.S. will increase tariffs on Chinese semiconductors starting from June 23, 2027. The scope will cover diodes, transistors, silicon materials, integrated circuits, and other raw materials, but not electronic products containing Chinese chips (such as computers, mobile phones, and electromechanical devices). The tariff rates will be announced 30 days before implementation.

The tone is high, the words are strong, but the subtleties are profound. The U.S. has already imposed numerous tariff barriers against Chinese manufacturing, but they have been immediate in effect. Such a major tariff that takes effect after 18 months is unprecedented.

The U.S. Section 301 investigation on Chinese chips focuses on mature chips (28nm and above) and examines the specific applications of these chips in downstream sectors such as defense, automotive, healthcare, aerospace, telecommunications, and power grids. The U.S. believes that within the next 3 to 5 years, China is expected to account for almost half of the global new capacity in mature chips, which would lead to supply chain dependence in the mature chip sector.

In fact, a certain kind of dependence has already formed. During the Anshih disturbance, Anshih China resolutely retaliated against Dutch Anshih's piracy, temporarily halting chip exports, causing a storm in the global automotive industry, with some factories forced to shut down due to chip supply disruptions.

The U.S. chip strategy is top-down, starting with advanced chips to drive overall industrialization. It is like rebuilding a restaurant from caviar and wagyu beef. But without chicken, duck, fish, fruits, and vegetables, you can't make a full meal with just the finest caviar and wagyu beef.

Imposing tariff barriers to restrict Chinese chip exports also aligns with the "small yard, high wall" strategy of the Biden era. The U.S. needs to keep China from rapidly climbing up the food chain in all strategic industries.

The U.S. has realized one thing: suppressing China's rise is no longer possible. The U.S. can only be satisfied with maintaining its lead.

The old method was to maintain a technological lead over China using technology several generations behind, while using profits from the Chinese market to further strengthen that lead. That won't work anymore. China has no intention of letting the U.S. maintain its lead; it is catching up quickly.

Only by continuously laying mines and obstacles on China's path forward can the U.S. slow down China's catch-up. Preventing China from profiting through exports and feeding back into its rapid catch-up in high-tech, high-profit areas has become an urgent national policy. This is the original intention behind the chip Section 301 investigation.

Western countries are eager to criticize China's "state-led, cost-reducing subsidies, and scale expansion" approach. These are common practices for developing new industries. The secret lies in quickly forming a virtuous cycle, moving away from subsidies, and achieving profitability and development through competition. China's electric vehicles are a typical example, but China's steel industry is an even earlier example.

What terrifies the U.S. is that China not only rapidly forms economies of scale using its vast domestic market, but also quickly builds a complete supply chain, and then climbs even higher on that basis.

This is a sustainable development cycle that is unstoppable, often at the expense of external competitors being marginalized. This is not a problem of a specific company, but an industry-wide issue. Suppressing a leading enterprise like Huawei is like pressing down one duckling and causing another to float up.

However, there are two major problems with the U.S. implementing chip tariff barriers now.

The first is that the U.S. and China reached a consensus at the Busan summit to pause the tariff war for one year, during which no new tariffs would be added. If the U.S. now increases chip tariffs, it would directly break the consensus, triggering a new round of tariff wars, the cost of which the U.S. cannot afford. The U.S. economy currently faces strong inflation pressure, and with people's livelihood becoming the biggest issue in the midterm elections, Trump dare not act recklessly.

Rising tensions in the tariff war could also spill over to rare earths. Trump has barely managed to win China's controlled release, and the U.S. manufacturing industry cannot accept China closing the tap again. The U.S. also needs to "persuade" China to accept "next-generation" technologies like H200. Even the wealthy NVIDIA cannot withstand the pain of the Chinese market being closed off.

But U.S. law requires that the Section 301 investigation results must be published within 12 months. Halting the investigation is impossible, which would make a series of similar investigations seem baseless and unable to calm the anxiety of U.S. anti-China hardliners and related manufacturers. Therefore, the investigation must continue, and it can only be announced now, without further delay. However, the law does not specify when the countermeasures must take effect.

A more important reason is that the U.S. does not have a substitute source for mature chips. It is easy to imagine extending the Anshih incident from automotive chips to more general industrial chips.

Mature chips may not be as eye-catching as advanced chips, but they are essential in automobiles, home appliances, medical equipment, aerospace, military, and electronics. From vacuum cleaners to microwave ovens, various relatively simple chips are needed.

If U.S. manufacturing wants to avoid production shutdowns, it has to absorb the tariff costs, directly adding the new tariffs to the costs of U.S. manufacturing, eroding corporate profits, and fueling inflation, which contradicts the original intention of revitalizing manufacturing, protecting the domestic supply chain, and ensuring job security.

In other words, delaying the implementation of chip tariffs is less about giving China a reprieve and more about giving its own supply chain a buffer period.

Additionally, choosing to raise tariffs 18 months later also serves as a warning and a way to test the waters, forcing companies and investors to act early and build alternative supply chains, avoiding being caught off guard later. In an ideal scenario, the mere threat of the chip tariffs might be enough to achieve the goal of establishing alternative supply chains, allowing the chip tariffs and others to serve as additional policy tools.

The U.S. has reached a point where it must "conserve its ammunition," because it increasingly realizes that it lacks sufficient resources in the competition with China.

China and the U.S. are only in a truce, not a ceasefire, let alone peace. Regarding the new U.S. tariffs, China certainly opposes them firmly. China doesn't just oppose them in words.

Over the past few years, the chip manufacturing capacity of mainland China has grown explosively. By the end of 2024, it had accounted for 21% of global chip foundry capacity, ranking second after Taiwan.

Now that advanced semiconductor manufacturing equipment is blocked, mainland China is focusing on developing mature processes of 28nm and above. There is nothing secretive about this — it is simply the growing demand for digital products made in China, and it also happens to capture global demand through the advantages of economies of scale.

For the U.S. to compete with China in mature chips is like competing in steel — it won't work. The only way is to protect itself through tariff barriers. Even if the U.S. eventually grows a necessary mature chip supply chain through "onshore" or "friend-shoring," it will not be able to compete with China in terms of cost and technical agility, resulting in higher product costs and a loss of overall competitiveness in the supply chain.

China is also quietly deepening its efforts in advanced semiconductors. Breakthroughs are just a matter of time, and not for long. In his New Year's address, which is usually concise, the Chinese leader specifically mentioned new breakthroughs in chip self-reliance.

The balance of power between China and the U.S. is at a critical turning point. Both China and the U.S. know this. Is June 2027 the time to strike? We don't know. But now is the time for both sides to prepare.

The U.S. needs to appease its anti-China hardliners domestically and avoid losing its room for maneuver internationally. Delaying the chip tariffs is inevitable.

While China firmly opposes the new U.S. tariffs, it remains relatively restrained in its actions. It is not in China's interest to escalate the confrontation too soon before the tariffs are actually implemented. China also needs time and space to adjust its industrial layout.

The U.S. is trading time for space, and China is trading space for time. For the global semiconductor industry chain, this long-term confrontation over rules and survival space is far from over.

By Chen Feng, renowned writer and columnist at Observer Network

Original: toutiao.com/article/7590678847562072576/

Statement: This article represents the views of the author.