President Donald Trump signed an executive order on Thursday imposing a 15% tariff on imported polysilicon and setting minimum import prices to protect domestic semiconductor and solar supply chains. The move follows a national security investigation and arrives amid a broader trade conflict between the United States and China.
The United States is tightening its grip on critical tech materials through fresh trade barriers. While markets adjusted to a sweeping 25% tariff on all steel and aluminum imports announced earlier in the week, the administration targeted a specialized component essential for semiconductors and solar panels.
Polysilicon Tariffs and the Race for Semiconductor Dominance
The executive order signed by President Trump on Thursday establishes a 15% tariff alongside minimum import prices for polysilicon and related products. Secretary of Commerce Howard Lutnick recommended the restrictions following a national security investigation into overseas production of the material.
Production of computer chips sits at the core of the technological rivalry between the United States and China, particularly in artificial intelligence development. The new tariff marks an escalation in Washington’s efforts to limit China’s role in critical technology supply chains, following previous restrictions on drones and humanoid robots.
“For decades, the US has allowed foreign firms to weaken United States producers in the polysilicon sector.”
Donald Trump
Domestic production capacity has dwindled. According to figures cited by the administration, the US share of global polysilicon output dropped from 50% in 2005 to less than 2% in 2024, leaving China in control of a near monopoly. The executive order aims to reverse this erosion while offering financial incentives to boost domestic manufacturing. Hemlock Semiconductor and Wacker Chemie stand to benefit most as the main producers of the material in the US.
Steel, Aluminum, and the Loophole Crackdown
The polysilicon restrictions arrive directly on the heels of broad metal duties. On Monday, the administration placed a 25% tariff on all steel and aluminum imports with no exceptions or exemptions, targeting foreign producers and plugging systemic trade loopholes.
America imports very little steel directly from China, by far the world’s largest producer of steel. Instead, much of the volume arrives indirectly through secondhand channels, or via third countries that purchase Chinese metal, re-ship it, or mislabel it to bypass trade enforcement.
“This is a big deal — making America rich again.”
Donald Trump
An administration official explained that the new structure eliminates exemptions that allowed countries to import semifinished steel, perform minor processing, and ship the finished goods to the United States to skirt penalties. The measures mirror actions from the first Trump administration, which placed tariffs of 25% on steel and 10% on aluminum in 2018.
Historical Context of American Metal Production
The domestic steel industry consumes tens of millions of tons annually for infrastructure, automotive manufacturing, appliances, and energy pipelines. While American steel mills produce about three times as much steel as is imported, historical precedent shows that trade barriers yield complex market adjustments.
Data from the American Iron and Steel Institute indicates that steel imports fell by 10.2 million tons, or 27%, between 2017 and 2019. Domestic output rose during that window by 6.8 million tons, or 7.5%, but the production boost proved short lived. Demand contracted sharply during the 2020 pandemic, and domestic output has yet to return to pre-2017 baseline levels.
Supply chains adapted to the earlier 2018 duties by redirecting orders away from China toward alternative suppliers. Canada emerged as the largest source of American steel imports, capturing approximately 23% of shipments, while China slipped to 10th place with less than 2% of exports to the US.
International Retaliation and Beijing’s Response
Trading partners have responded swiftly to the escalating duties. The Chinese embassy in Washington condemned the polysilicon measures, arguing that Washington is abusing state power to go after Chinese businesses
and warning that protectionism will not make the US more competitive.
Beijing stated that the decision seriously disrupts
bilateral trade and vowed to protect its companies. Countermeasures announced by China include tighter export controls on drones alongside a national security review targeting imported printers and copiers.
The wider tariff friction extends beyond industrial inputs. Last week, the administration imposed a 10% tariff on all Chinese imports to the US, prompting retaliatory levies from Beijing on certain chips and metals. At the same time, the administration has tempered certain enforcement actions, pausing tariffs on goods valued at $800 or less until the Commerce Department implements a tracking system, and temporarily suspending 25% tariffs on goods from Mexico and Canada until at least March 1.
