USA makes imports of chip and solar cell raw material polysilicon more expensive

The U.S. government has enacted new regulations on polysilicon imports, a crucial raw material for solar cells and semiconductors, aiming to shield its domestic industry from foreign dumping prices. President Donald Trump signed a decree establishing minimum import prices for polysilicon and related downstream products, along with a 15% flat tariff on processed goods. The administration also intends to offer incentives for companies to relocate their production to the United States. These measures are slated to take effect 120 days after the decree's signing.

Citing national security concerns, the U.S. government invoked Section 232 of the "Trade Expansion Act" of 1962, a provision previously used by Trump to impose tariffs on steel, aluminum, and automobiles. Polysilicon, essential for the solar sector and the manufacturing of computer chips, is produced by companies like Germany's Wacker Chemie, which has production facilities in Charleston, Tennessee.

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The new measures are 'essential' because imports endangered national security.

The new U.S. policies are expected to primarily benefit Hemlock Semiconductor, a joint venture between U.S. firm Corning and Japan's Shin-Etsu Handotai, which have long contended with low-cost competition from China. Beijing has already voiced strong opposition, with Foreign Ministry spokesperson Lin Jian accusing Washington of overextending the concept of national security and weaponizing state power against Chinese enterprises. China argues that protectionism does not enhance U.S. competitiveness but rather disrupts normal trade and harms both American businesses and consumers.

This move escalates an ongoing trade dispute between Washington and Beijing. Previously, the U.S. added 43 Chinese companies to a restricted list due to allegations of forced labor in the Xinjiang region, prohibiting their goods from entering the country. In response, China's Ministry of Commerce banned collaboration with six U.S. companies and organizations, including those scrutinizing supply chains for Xinjiang ties and human rights groups, accusing them of supporting U.S. sanctions. The U.S. has also recently imposed tariffs on imports from approximately 60 countries.

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Protectionism does not make the USA more competitive, but rather disrupts normal trade and also harms American companies and consumers.