With one foot out of the Oval Office, U.S. President Joe Biden fired a parting shot at China’s semiconductor industry—setting the stage for fresh trade tensions over the powerful technologies for President-elect Donald Trump’s incoming administration.
The U.S. Commerce Department announced new export controls that target China on Dec. 2, including controls on 24 types of semiconductor manufacturing equipment, three types of software tools for developing semiconductors, and high-bandwidth memory chips. It will also add 140 companies, many of which are based in China, to an “entity list” that places a licensing requirement on the purchase of U.S. technology.
With one foot out of the Oval Office, U.S. President Joe Biden fired a parting shot at China’s semiconductor industry—setting the stage for fresh trade tensions over the powerful technologies for President-elect Donald Trump’s incoming administration.
The U.S. Commerce Department announced new export controls that target China on Dec. 2, including controls on 24 types of semiconductor manufacturing equipment, three types of software tools for developing semiconductors, and high-bandwidth memory chips. It will also add 140 companies, many of which are based in China, to an “entity list” that places a licensing requirement on the purchase of U.S. technology.
Beijing responded within hours of the U.S. news and struck back by announcing its own export ban on key tech materials such as gallium, germanium, and antimony, which is a seemingly obscure metal that actually has vital defense applications. It also plans to tighten its exports of graphite, a raw material that underpins electric vehicle batteries.
The measures represent the latest escalation in Washington and Beijing’s long-standing trade spat over the powerful semiconductor chips that are essential components in advanced technology and defense systems. It’s the Biden administration’s third such effort to curb China’s ability to make advanced chips used in artificial intelligence and military applications; it initially imposed restrictions in October 2022 and expanded them in 2023.
“This action is the culmination of the Biden-Harris administration’s targeted approach, in concert with our allies and partners, to impair [China’s] ability to indigenize the production of advanced technologies that pose a risk to our national security,” Commerce Secretary Gina Raimondo said in a statement announcing the new restrictions.
The latest round of export controls had been expected for months, with negotiations with U.S. allies such as Japan and the Netherlands—which produce most of the world’s advanced chipmaking equipment—delaying the announcement (both countries have received exemptions from the restrictions).
“We’ve been waiting for these controls for a long time,” said Geoffrey Gertz, a senior fellow at the Center for a New American Security. “Among the range of things that were discussed, it’s probably a little more moderate than some of the earlier reporting suggested.”
China’s response, by contrast, was swift. In a press briefing on Dec. 3, Chinese Foreign Ministry spokesperson Lin Jian said that the Biden administration was “maliciously suppressing China’s technology progress” and that Beijing had “lodged serious protests” against the recent measures. The United States has been “abusing export controls,” he said, and China “will do what is necessary to firmly safeguard our security and development interests.”
“China is effectively saying two can play this game,” said Cullen Hendrix, a senior fellow at the Peterson Institute for International Economics, who cited Beijing’s market dominance over many of the “ basic building blocks of a modern industrial economy.” He added that China’s message is: “We can play this game, and we can actually spread the pain out across more sectors.”
Beijing overwhelmingly commands the supply chains of many of the world’s critical minerals and metals—the materials underpinning clean energy technologies and advanced weapons systems—making them a vital chokepoint in the U.S.-China trade fight.
With gallium and germanium, for example, China accounts for some 94 and 83 percent of global stocks of the metals, respectively, and about half of the United States’ supply. With antimony, China is the source of nearly half of global production and over 60 percent of U.S. imports. And as the world’s top graphite producer, Beijing dominates the mineral’s international market and refines more than 90 percent of it globally.
The problem for Washington is that, no matter how quickly it wishes to slash that dependence, securing new supply chains will take years—leaving the United States vulnerable to Beijing’s whims in the immediate future.
“U.S. dependence on China for these minerals is a known Achilles heel,” said Jane Nakano, an energy security expert at the Center for Strategic and International Studies. “The latest development is a very blunt reminder that we, the United States, continue to be dependent.”
This isn’t the first time that Beijing has targeted these materials. All of them were already under some sort of partial export control, although data suggests that Beijing’s curbs on germanium and graphite didn’t have much of an impact on total U.S. imports from China, as Hendrix, the Peterson Institute expert, has written. One exception is U.S. imports of gallium arsenide wafers—one material that Washington has been less reliant on China for—which have now effectively dropped to zero.
Far from an all-out assault on U.S. supply chains, Hendrix wrote, China’s export controls “seem to have amounted to a flexing of Chinese muscle and a fact-finding mission.”
The latest escalation has raised the stakes. If Beijing was flexing its muscles before, it has now “[taken] a swing,” said Tom Moerenhout, a critical minerals expert at Columbia University. “A full export prohibition should also raise all sorts of alarm bells,” he said, because if Beijing is now targeting semiconductors, “what if it happens with graphite or rare earths?”
For Washington, which has already been ramping up measures to diversify away from Beijing, China’s latest measures will only accelerate the ongoing effort. But Beijing’s expansion of restrictions to a full export ban will likely also spark a new scramble for alternative supplies and add more strain on the domestic mining industry, which has long grappled with a challenging financial environment, lengthy permitting delays, and, more recently, political uncertainty as President-elect Donald Trump prepares to return to office.
“In the short term, this is going to create a scramble because these fully domestic supply chains or North American supply chains have not materialized,” said Hendrix.
The U.S. Geological Survey has estimated that if China imposed a total ban on its net gallium and germanium exports, the move could result in a $3.4 billion drop in U.S. GDP—economic losses that would mostly be felt by the semiconductor manufacturing industry.
In a speech in Washington on Dec. 3, U.S. National Security Advisor Jake Sullivan said that China’s latest curbs are “a continuing reminder of the need of the United States to have diverse and resilient supply chains for critical minerals with national security applications, and not to be reliant on any single country, especially a competitor like [China].”
Going forward, Sullivan urged the next Trump administration to continue working with Congress and private industry to diversify U.S. critical mineral supply chains. It will take “at least the next decade to get ourselves in a position where we can really breathe a sigh of relief,” he said. “This is going to be a highly contested space, and there’s a lot more work to be done.”
“It’s a threat for sure, and I think the United States and other allies have recognized for a long time that it’s a threat, so we know that we must do something about it,” said a former Trump administration official, who spoke on the condition of anonymity to speak candidly about the administration’s strategy. “We have to make sure that we are opening up our own access to some rare and raw materials that are a critical part of these supply chains,” they said, adding that China’s critical mineral ban doesn’t come “as a surprise, though I do think that it’s not insignificant in terms of our security.”
Most officials and experts see it as a relatively safe bet that Trump will continue to be tough on China in his second term. The impulse to handicap Chinese technology, which has defined much of the Biden administration’s policy goals, was started during the first Trump administration, which used export controls as part of a broader trade war and even targeted specific Chinese tech giants such as Huawei and TikTok.
And even as U.S. allies and partners may express concern over some of Trump’s trade proposals and his more transactional approach to foreign policy compared to Biden’s multilateral one, China is an area where finding common ground may be more straightforward. The first Trump administration’s Clean Network initiative, aimed at stripping Western telecommunications networks of Chinese vendors such as Huawei, was signed by more than 60 countries, the former Trump official pointed out. “I think at a high level, there’ll be a lot of continuity between the two administrations on tech controls toward China, so I think there won’t be any massive rupture or big change of course,” Gertz said, adding that allies such as the Dutch and Japanese have already aligned their own China tech policies with Washington’s far more than when Trump was last in office and have their own incentives for doing so.
“Having said that, I do think the Trump administration most likely will be more open to reaching for sticks,” Gertz said, specifically citing the foreign direct product rule that can impose extraterritorial controls on any firm that uses U.S. technology. “I don’t think there’s a world where [allies] can ignore this or Trump-proof it. They have to engage.”
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