The Office of the US Trade Representative (USTR) has launched an investigation into China’s semiconductor industry, looking for anti-competitive trade practices. According to a White House statement, USTR is investigating China’s “acts, policies, and practices” that have reduced or eliminated competition in the market for semiconductors.
The investigation is being conducted through Section 301 of the US Trade Act 1974 to examine trade practices for “foundational” semiconductors used by the automotive, healthcare, infrastructure, aerospace, and defense industries. According to the statement, the White House on Monday accused China of “routinely” engaging in “anti-market policies and practices, as well as industrial targeting of the semiconductor industry” that significantly harmed its competitiveness and created “dangerous supply chain dependencies.”
If action is taken as a result of the investigation, Section 301 allows USTR to “impose tariffs or other import restrictions,” “withdraw or suspend trade agreement concessions,” or enter into an agreement with China to “either cease the conduct in question… or compensate the United States with satisfactory trade benefits,” according to the US Trade Act. However, those decisions will be left to President Trump’s administration and incoming USTR Jamieson Greer.
A Chinese Commerce Ministry spokesperson said in a statement that China “strongly condemns and firmly opposes” the US investigation. The nation will “take all necessary measures to safeguard its rights and interests,” according to the New York Times.
Tensions between the US and China are already high. President Biden launched an investigation into China and other unnamed countries in February over potential vulnerabilities and threats from connected vehicles. Then in May, the White House announced a significant increase in tariffs on $18 billion worth of Chinese imports, including semiconductors.
The US Treasury Department told lawmakers in a letter in December that its documents and workstations were accessed by an outside party in a security breach. It described the attack as “a major cybersecurity incident” and attributed it to a “China state-sponsored advanced persistent threat actor.” Now, The Washington Post reports that bad actors infiltrated a “highly sensitive office” within the Treasury that is responsible for deliberating and administering US government sanctions.
As The Post points out, the Office of Foreign Assets Control (OFAC) has some critical information that could be very useful to another country’s government.
While the hackers were only able to steal unclassified data, they could still get their hands on the identities of potential sanctions targets. They could also steal pieces of evidence that the agency has collected as part of its investigations on entities that the government is thinking of sanctioning. Overall, the attackers could have obtained enough information to provide insight into how the US develops sanctions against foreign entities.
In addition to OFAC, the Office of the Treasury Secretary and the Office of Financial Research were also affected by the breach. The attackers infiltrated Treasury’s systems by gaining access to a key used by BeyondTrust, a cloud-based service that provides technical support to the department.
The US government has blamed China’s state-sponsored actors for several cyberattacks on its agencies and US companies in the past few years. Just last year, the FBI blamed “PRC-linked actors” for a massive hack on US telecommunications companies.
The actors, a group known as Salt Typhoon, reportedly targeted the mobile devices of diplomats, government officials, and others associated with both presidential campaigns. According to The Post, Chinese officials called the claim that their country was involved in the attack on the Treasury Department “baseless” and insisted that their government “always opposes all forms of hacker attacks.”