GPUs dodge price hike as US extends China tariff deadline beyond 2022

Happy New Year! Concession is made on GPUs and other parts

Those fearing that graphics cards could see a significant price increase due to US tariffs returning for certain Chinese components can take a sigh of relief — for now.

The Office of the United States Trade Representative announced on Friday that it will continue to exclude graphics cards and hundreds of other components from tariffs that were originally put on more than $300 billion in imports from China by the Trump administration in 2018.

The exclusions for the 352 products exported from China [PDF] were set to expire on New Year's Eve, but the US trade office said it will continue to not slap tariffs on the components for another nine months. The Biden administration first applied the tariff exclusions in March after a previous exemption under Trump's leadership expired at the end of 2020.

Exempting these Chinese-made components means such products will avoid potential price hikes from tariffs that were as much as 25 percent in some areas. We saw this play out when graphics board manufacturer Asus disclosed in March it would slash prices of some of its graphics cards by up to 25 percent, shortly after the tariff exclusions were announced.

The new extension is a notable concession by the US on the reliance of China for hundreds of components. After all, the Biden administration has been aggressively ramping up trade restrictions against China in recent months to defang its semiconductor industry, with the goal of hurting its economic and military power.

Whether to end the Trump-era tariffs on Chinese exports has been a heated discussion within the White House, as we noted back in July. On one end, Treasury Secretary Janet Yellen reportedly argued that ending tariffs would help calm inflation. On the other, US trade representative Katherine Tai worried that removing tariffs would hurt Uncle Sam's negotiation power with China.

The US first issued the tariffs under 2018 after a nearly seven-month investigation [PDF] by the US trade office found evidence of what the Trump administration considered "unfair" trade policies and practices from China. This included rampant intellectual property theft and hacking attacks on American companies.

This led the US and China to reach a trade deal in 2019 in phase one of negotiations. The deal required China to make structural reforms and changes to intellectual property, technology transfer and financial services. China had also pledged to make sizeable agriculture and services purchases while the US agreed to significant changes to Section 301 tariffs.

At the same time, the US said it would maintain 25 percent tariffs on roughly $250 billion of Chinese imports, plus 7.5 percent on approximately $120 billion of Chinese imports.

The US and China have yet to reach a deal in phase two of the trade negotiations. Bloomberg reported in October that White House officials are waiting to see whether the country may be open to further reforms. ®