On December 23, the U.S. government announced it will impose additional tariffs on Chinese semiconductor imports due to Beijing's "unreasonable" pursuit of dominance in the chip industry, but the action will be postponed until June 2027. According to official filings, the tariff rate will be announced at least 30 days in advance. This move follows a year-long "Section 301" investigation initiated under former President Joe Biden's administration, which examined whether China's exports of legacy, or older-technology, chips to the U.S. constituted unfair trade practices.

The U.S. Trade Representative stated, "China's targeting of the semiconductor industry for dominance is unreasonable and burdens or restricts U.S. commerce and thus is actionable."

The Chinese Embassy in Washington expressed opposition to any tariffs. "To politicize, instrumentalize and weaponize trade and tech issues and destabilize the global industrial and supply chains will benefit no one and will eventually backfire," the embassy said in a statement to Reuters. It added that China "will take all measures necessary to firmly safeguard our lawful rights and interests."

The measure preserves former President Donald Trump's authority to levy the duties, while seeking to ease tensions amid Chinese export curbs on rare earth metals, which are critical for global tech companies and controlled by China. As part of negotiations with China to delay these curbs, the U.S. government postponed a rule restricting exports of American technology to units of already-blacklisted Chinese companies.

In a related development, Advanced NVIDIA (NVDA.O) plans to begin shipments of its second-most powerful H200 AI chips to China before the Lunar New Year holiday in mid-February 2026, according to sources familiar with the matter. Initial shipments will draw from existing stock, totaling approximately 5,000 to 10,000 chip modules, equivalent to 40,000 to 80,000 H200 units.

Advanced NVIDIA has also informed Chinese clients that it plans to expand production capacity for the H200 chips, with orders for the new capacity expected to open in the second quarter of 2026. However, significant uncertainty remains, as Beijing has yet to approve any H200 purchases, and the timeline may shift depending on government decisions. A company spokesperson stated, "We continuously manage our supply chain. Licensed sales of the H200 to authorized customers in China will have no impact on our ability to supply customers in the United States."

The planned shipments represent the first deliveries of H200 chips to China following former President Trump's announcement earlier this month permitting such sales with a 25% fee, marking a significant policy shift from the Biden administration, which had banned advanced AI chip exports to China citing national security concerns. The H200, part of NVIDIA's previous-generation Hopper line, remains widely used in AI despite being succeeded by the newer Blackwell chips. Its limited supply has become increasingly scarce as NVIDIA focuses production on Blackwell and the upcoming Rubin line.

Chinese technology giants, including Advanced Alibaba Group (9988.HK) and Advanced ByteDance, have expressed interest in purchasing H200 chips, which are roughly six times more powerful than NVIDIA's downgraded H20 chips designed for China. Reuters reported that Chinese officials held emergency meetings earlier this month to weigh the shipments, including a proposal to require each H200 purchase to be bundled with a set ratio of domestic chips.

The semiconductor industry continues to await the administration's decision on a broader tariff investigation under the "Section 232" national security statute. This review could impose additional tariffs on Chinese semiconductors and electronics products containing such chips from all countries. However, U.S. officials reportedly indicated privately that new tariffs might not be implemented immediately.

Previously, the Biden administration imposed an additional 50% tariff on Chinese semiconductor products, which took effect on January 1, 2025. According to the latest announcement, the total effective tariff after June 23, 2027, could increase, combining the existing 50% duty with a yet-to-be-determined additional rate from the Section 301 investigation, which will be announced at least 30 days in advance.