US 50% China Semiconductor Tariff

[tszaboo]

The US exports $9.61B worth of integrated circuits to China and $5.34B to Chinese Taipei for a total of about $15B in exports to the Chinese.

The US imports only $2.62B worth of integrated circuits from China and $5.39 from Chinese Taipei for a total of about $8B of imports from the Chinese.

Is that just raw components?  I too don't see the point of a protective tariff against a country that we're a net exporter to. 

As a practical matter, a 50% tariff on ultra-low cost lower tier semis isn't going to move the needle as the overall cost with the tariff is still too low for some US company to invest in additional low-grade fab capacity to produce them.  And if they are only applying the tariff to raw components,  then that's just one more reason to use JLPCB instead of an onshore company.

Also true. I don't see companies switching from a "1 cent per piece in a reel" LDO to a Linear Technology one, that cost 3 dollar, just because you placed a 50% tariff on the 1 cent LDO.

[bdunham7]

It makes perfect sense to your typical YOU  S  AYE  chanting redneck

Dave asked us to keep politics out of it, although that's pretty difficult with a subject like tariffs that are inherently political in origin.  I'll try to respond to this here without getting bounced.

One doesn't have to be a nationalist redneck to recognize that there is a real danger in outsourcing or "offshoring" industries that we rely on for both economic and national security (defense) interests.  If those things are outsourced to a frenemy that we end up in a cold war with, it could take a few years to reestablish those industries locally or with a friendly ally.  This goes for rare earth minerals, semiconductors, steel, etc.  Consumer electronics and the like are much less important.  So I support the general ideas of policies that maintain at least a capability and a presence of all of those industries in the USA or a reliable ally.  I'd support doing this even if it comes at a significant cost of economic efficiency and would approve of a plan that resulted in permanent excess capacity, something economists abhor.

However, the semiconductor tariff that we're talking about here seems awkward and weird.  Fabs have been placed globally for years in places like Costa Rica, Malaysia, Korea (before its modern development) and so on.  AFAIK, China has yet to dominate this market and there's no immediate danger of them doing so--short of overrunning Taiwan and capturing TSMC.  Someone correct me if I'm misinformed about that.

[JeremyC]

However, the semiconductor tariff that we're talking about here seems awkward and weird.  Fabs have been placed globally for years in places like Costa Rica, Malaysia, Korea (before its modern development) and so on.  AFAIK, China has yet to dominate this market and there's no immediate danger of them doing so--short of overrunning Taiwan and capturing TSMC.  Someone correct me if I'm misinformed about that.

I'm not sure and I would be more careful with this statement...

[m k]

If Chinese Taipei is not included, the balance is even worse.  $9.61B vs. $2.62B 

So, in "protecting" the US IC industry by putting a 50% tariff on Chinese ICs, what if China reciprocates? 

It's possible that they sort of can't, no alternatives, but that's not how it goes.
Last I remember was so that China dropped some food imports and some US farmers became vocal.

Finally this hits China since it's so export oriented economy, I think.
But they will also adapt, maybe the final outcome is BYD made in USA, possibly a goal also.

[eTobey]

This is like putting salt on a wound, called "already struggeling world economy". Do they already have the capability to produce their own semiconductors to compensate?

In general tariffs are good for the own economy, but others might not like this, and answers this with their own.

[soldar]

However, the semiconductor tariff that we're talking about here seems awkward and weird.  Fabs have been placed globally for years in places like Costa Rica, Malaysia, Korea (before its modern development) and so on.  AFAIK, China has yet to dominate this market and there's no immediate danger of them doing so--short of overrunning Taiwan and capturing TSMC.  Someone correct me if I'm misinformed about that.

I'm not sure and I would be more careful with this statement...

There is a lot of fearmongering and a lot of ignorance.

China now is interested in trade and the best way to promote peace, always, is to promote trade, exchange, understanding.

The best way to create conditions for war is to block trade, exchange, understanding.

The thing is that countries enter spirals of fear. Oh, they have bad intentions, we better be hostile and prepare for the worst. Then the other side sees that and does the same and soon a spiral gets out of control and war ensues.

As long as the West trades with China, China is not interested in upsetting the boat. If the West paints China into a corner then we can expect bad things to happen. Putting pressure on any country or people with the justification that they might do bad things is a self-fulfilling prophecy.

"Cet animal est très méchant. Quand on l'attaque il se défend."
This animal is very vicious. When it is attacked it defends itself.
Quote from La Ménagerie, a burlesque song from 1868.

Trade, communication, exchange, understanding are the best things for peace and they are sorely lacking in today's world.

[soldar]

In general tariffs are good for the own economy, but others might not like this, and answers this with their own.

This is a commonly held opinion and I believe it is mistaken. Putting tariffs on a product means a few jobs will be subsidized in that sector by the rest of the country.  There is no gain.

Protectionist countries are countries where, if they exist at all, locally made things are absolute crap and where imported things are extremely expensive.

Protectionism is damaging for the country implementing it.

[coppercone2]

It makes perfect sense to your typical YOU  S  AYE  chanting redneck

Dave asked us to keep politics out of it, although that's pretty difficult with a subject like tariffs that are inherently political in origin.  I'll try to respond to this here without getting bounced.

One doesn't have to be a nationalist redneck to recognize that there is a real danger in outsourcing or "offshoring" industries that we rely on for both economic and national security (defense) interests.  If those things are outsourced to a frenemy that we end up in a cold war with, it could take a few years to reestablish those industries locally or with a friendly ally.  This goes for rare earth minerals, semiconductors, steel, etc.  Consumer electronics and the like are much less important.  So I support the general ideas of policies that maintain at least a capability and a presence of all of those industries in the USA or a reliable ally.  I'd support doing this even if it comes at a significant cost of economic efficiency and would approve of a plan that resulted in permanent excess capacity, something economists abhor.

However, the semiconductor tariff that we're talking about here seems awkward and weird.  Fabs have been placed globally for years in places like Costa Rica, Malaysia, Korea (before its modern development) and so on.  AFAIK, China has yet to dominate this market and there's no immediate danger of them doing so--short of overrunning Taiwan and capturing TSMC.  Someone correct me if I'm misinformed about that.

thats the wrong mindset. consumer electronics are super important. russia dedicated its electronics industry to defense. they got the good parts. consumers got 3rd rate crap. this caused massive discontent in the population. people like washers . It did little good for them to have better rocket engines when people could not get a color TV

you don't want your country to be a militarized low tech ghetto

also open industry makes the progress. secret programs stall out because they risk losing secrecy.

they need a plan to keep goods being made and not rely on the idea that people don't need it. i hope its there. especially with the low shelf life of current high end consumer product, we are basically on a subscription service before something breaks.

[floobydust]

However, the semiconductor tariff that we're talking about here seems awkward and weird.  Fabs have been placed globally for years in places like Costa Rica, Malaysia, Korea (before its modern development) and so on.  AFAIK, China has yet to dominate this market and there's no immediate danger of them doing so--short of overrunning Taiwan and capturing TSMC.  Someone correct me if I'm misinformed about that.

I'm not sure and I would be more careful with this statement...

There is a lot of fearmongering and a lot of ignorance.

China now is interested in trade and the best way to promote peace, always, is to promote trade, exchange, understanding.

The best way to create conditions for war is to block trade, exchange, understanding.

The thing is that countries enter spirals of fear. Oh, they have bad intentions, we better be hostile and prepare for the worst. Then the other side sees that and does the same and soon a spiral gets out of control and war ensues.

As long as the West trades with China, China is not interested in upsetting the boat. If the West paints China into a corner then we can expect bad things to happen. Putting pressure on any country or people with the justification that they might do bad things is a self-fulfilling prophecy.

"Cet animal est très méchant. Quand on l'attaque il se défend."
This animal is very vicious. When it is attacked it defends itself.
Quote from La Ménagerie, a burlesque song from 1868.

Trade, communication, exchange, understanding are the best things for peace and they are sorely lacking in today's world.

Ha! Such a nice view of the world, excellent propaganda!
china has been dumping products for many years. Manipulated their currency, massive overcapacity in manufacturing.

We all love the artificially low prices though.

At the same time it's basically economic warfare and has intentionally caused industries to go bust. There is a long-term goal.
The West's demise in manufacturing is its own fault, corporations love outsourcing and have zero commitment to doing anything local. There is no nationalism on Wall Street. We have higher labour costs, some responsibility to the environment- which china desecrates.

Trade wars are real and happening right now.

[tautech]

Trade wars are real and happening right now.

As has been the case for the last couple of 100 years.
The Opium wars was the start of it............

[floobydust]

Has anyone actually been able to find the list of the semiconductors with the new tariffs ?
I tried and it all seems to be based on HST codes.

Trade wars are real and happening right now.

As has been the case for the last couple of 100 years.
The Opium wars was the start of it............

OT- regarding the Opium Wars and 100 years of Humiliation, they're paying us back hundred fold manufacturing opioids and illicit street drugs. Why wouldn't they?

[thm_w]

Has anyone actually been able to find the list of the semiconductors with the new tariffs ?
I tried and it all seems to be based on HST codes.

Yes that is how tariffs work, HST code and COO. Those are required to be declared when exporting significant product.
One IC could be made/packaged in 3+ different countries.

https://www.tariffnumber.com/2024/85415900

[soldar]

Ha! Such a nice view of the world, excellent propaganda!
china has been dumping products for many years. Manipulated their currency, massive overcapacity in manufacturing.

We all love the artificially low prices though.

At the same time it's basically economic warfare and has intentionally caused industries to go bust. There is a long-term goal.
The West's demise in manufacturing is its own fault, corporations love outsourcing and have zero commitment to doing anything local. There is no nationalism on Wall Street. We have higher labour costs, some responsibility to the environment- which china desecrates.

Trade wars are real and happening right now.

Yes, there is a trade war and it is not China starting it. China is interested in free trade right now which is quite ironic if you think about it because a couple centuries ago it was Europeans going to Asia and demanding free trade. "Buy my stuff or else."

https://en.wikipedia.org/wiki/Opium_Wars
https://en.wikipedia.org/wiki/Perry_Expedition

I am the opinion that trade, commerce, communication are good for the economy, good for peace, good for humanity.

I am of the opinion that when another country is buying a lot of stuff from your country it is not advisable to shoot at your customers.

Just my opinion.

[tautech]

Has anyone actually been able to find the list of the semiconductors with the new tariffs ?
I tried and it all seems to be based on HST codes.

Trade wars are real and happening right now.

As has been the case for the last couple of 100 years.
The Opium wars was the start of it............

OT- regarding the Opium Wars and 100 years of Humiliation, they're paying us back hundred fold manufacturing opioids and illicit street drugs. Why wouldn't they?

Hardly OT.
Instead about trade, wanted or not.

But as Bill pointed out, it's about the balance of trade which again is currently skewed but seemingly in the US's favor.
Why they then would want to place tariffs on products they seemingly need and in doing so increase costs of many products to their people and risk tit for tat reciprocal tariffs is beyond me. 

Instead OTT when just a few years back 10% tariff was placed on TE of China origin and now they wanna lump on more. 

[soldar]

OT- regarding the Opium Wars and 100 years of Humiliation, they're paying us back hundred fold manufacturing opioids and illicit street drugs. Why wouldn't they?

WTF are you talking about? China, Japan and other developed Asian countries are a million times stricter than western countries.

Really.

[JeremyC]

OT- regarding the Opium Wars and 100 years of Humiliation, they're paying us back hundred fold manufacturing opioids and illicit street drugs. Why wouldn't they?

WTF are you talking about? China, Japan and other developed Asian countries are a million times stricter than western countries.

Really.

Really? ...check links below:
https://www.npr.org/2024/04/16/1244964595/fentanyl-china-precursor-overdose
https://www.uscc.gov/sites/default/files/2021-08/Illicit_Fentanyl_from_China-An_Evolving_Global_Operation.pdf

[HuronKing]

OT- regarding the Opium Wars and 100 years of Humiliation, they're paying us back hundred fold manufacturing opioids and illicit street drugs. Why wouldn't they?

WTF are you talking about? China, Japan and other developed Asian countries are a million times stricter than western countries.

Really.

He means that those countries are supplying illicit drugs to Western countries as a means of undermining society. This is pretty well documented:
https://www.politico.com/news/2022/02/07/fentanyl-china-war-on-drugs-00005920

This article speaks directly to it:
https://www.economist.com/china/2018/12/15/the-west-once-flooded-china-with-opium-china-is-returning-the-favour

[floobydust]

Anyone remember the Foxxconn Wisconsin LCD plant? The one Trump tooted his horn about.
Finally it's realized it will never happen. No on-shoring of LCD panels, no "bring it back to 'merica". Despite Wisconsin taxpayers paying $500M for the land and infrastructure, the tax concessions etc. That on-shoring attempt is a massive failure. Microsoft is turning it into an AI+cloud campus, I think investing $3.3B.

OT- regarding the Opium Wars and 100 years of Humiliation, they're paying us back hundred fold manufacturing opioids and illicit street drugs. Why wouldn't they?

WTF are you talking about? China, Japan and other developed Asian countries are a million times stricter than western countries.

Really.

"Stricter?" Manufacturing opioids, precursors has been perfectly legal in china, many teapot pharmaceutical companies providing payback for the 100 Years of Humiliation. The State looks the other way. 2019 they added a bit of oversight but it's of course a farce. Fentanyl Flow to the United States

OT- regarding the Opium Wars and 100 years of Humiliation, they're paying us back hundred fold manufacturing opioids and illicit street drugs. Why wouldn't they?

Hardly OT.
Instead about trade, wanted or not. [...]

This thread is filled with hydrogen and a few other substances. It could of course explode soon.
We have the West doing poorly with local hi tech manufacturing, a lack of a plan, no nationalism and Wall Street/Corporate priority #1 is maximum profit regardless of the losses to a nation. china is superior in all that.
Don't forget Analog Devices acquired Linear Tech and shut down their fab in California, laid off staff and now outsources it. Do they give a fuck about America and on-shoring. No. It's all about profit. Would tariffs have inspired them to keep that USA fab alive? Then it's whining "there are no qualified people" because they were out of work thanks to you Mr. Big Co.
Tariffs ain't gonna move anything back the the USA, it might get a few votes and the illusion of taking action, but it's a clown car move without a long-term strategy.

[themadhippy]

He means that those countries are supplying illicit drugs to Western countries as a means of undermining society. :

And of course the  american opiate problem had nothing to do with the over prescription of opiate based medicine and then  cutting off the supply over night.

[BillyO]

Okay, can we get back to the effects of the tariffs mentioned in the OP please?  Otherwise Dave will shut down the discussion.

[tautech]

OT- regarding the Opium Wars and 100 years of Humiliation, they're paying us back hundred fold manufacturing opioids and illicit street drugs. Why wouldn't they?

Hardly OT.
Instead about trade, wanted or not. [...]

This thread is filled with hydrogen and a few other substances. It could of course explode soon.
We have the West doing poorly with local hi tech manufacturing, a lack of a plan, no nationalism and Wall Street/Corporate priority #1 is maximum profit regardless of the losses to a nation. china is superior in all that.
Don't forget Analog Devices acquired Linear Tech and shut down their fab in California, laid off staff and now outsources it. Do they give a fuck about America and on-shoring. No. It's all about profit. Would tariffs have inspired them to keep that USA fab alive? Then it's whining "there are no qualified people" because they were out of work thanks to you Mr. Big Co.
Tariffs ain't gonna move anything back the the USA, it might get a few votes and the illusion of taking action, but it's a clown car move without a long-term strategy.

Yup, very well put.

It seems just a few of us see the bigger picture.

[thm_w]

No, a few of you keep ranting on about politics when it is not the purpose of this thread. Even after being reminded multiple times.

[bdunham7]

Tariffs ain't gonna move anything back the the USA, it might get a few votes and the illusion of taking action, but it's a clown car move without a long-term strategy.

It doesn't have to move anything back to the USA for it to be effective.  Just encouraging the moving of manfacturing to Mexico, Argentina, India, Costa Rica, Korea, Malaysia or the Phillipines is sufficient to meet at least some of their goals.  I don't think anyone is under the illusion that an economy where fast food workers get $20+ is going to be cost effective at semiconductor manufacturing.

[schmitt trigger]

I am also of the opinion that tariffs,

• Follow the laws of unintended consequences, causing unforeseen market shifts, not always positive.
  
  
• People will always find loopholes to circumvent them.
  
  
• And lastly, tariffs tend to outlive its original raison d'être.
  
  There are many examples, but a particularly egregious one is the "Chicken Tax" applied to light trucks imported into the US.  60 years old and counting.
  
  
  

[soldar]

It doesn't have to move anything back to the USA for it to be effective.  Just encouraging the moving of manfacturing to Mexico, Argentina, India, Costa Rica, Korea, Malaysia or the Phillipines is sufficient to meet at least some of their goals.  I don't think anyone is under the illusion that an economy where fast food workers get $20+ is going to be cost effective at semiconductor manufacturing.

We live in a global globe. China and Chinese companies are expanding everywhere. They can easily build a factory in any other country. Chinese capital, Chinese management and maybe even Chinese workers. Or local workers, no matter. Now what?