Trump imposes 15% tariff on key chip material to counter China

Breaking news from the markets: Trump imposes 15% tariff on key chip material to counter ChinaImage source, VCG via Getty ImagesImage caption, China is the world's biggest producer of polysilicon, a key material used in making chips and solar panelsByOsmond ChiaBusiness reporterPublished7 August 2026US President Donald Trump signed an executive order on Thursday that imposes a 15% tariff on imported products made from polysilicon, a crucial material used in semiconductors and solar panels. The order also set minimum import prices on polysilicon and related products. It comes after a national security investigation into the production of the material overseas.

The move is intended to help protect US manufacturers as they face increasing competition from China's chip industry - a key source of friction between the world's two largest economies. The Chinese embassy in Washington said the move "seriously disrupts" trade between the two countries and Beijing will act to protect its companies. Washington is "abusing state power to go after Chinese businesses," the embassy said, adding that protectionism will not make the US more competitive.

Economic Details

Trump said in the order, external that he had accepted recommendations by Secretary of Commerce Howard Lutnick to set minimum import prices as well as a 15% tariff on polysilicon and related imports. The measures are due to take effect in December. The US will also offer incentives to boost domestic production, it added.

For decades, the US has allowed "foreign firms to weaken United States producers in the polysilicon sector," said Trump, who has long advocated for the use of tariffs to protect American jobs and boost the economy. The material is critical in military equipment and electronics, yet imports have led to the US' share of global polysilicon production to fall from 50% in 2005 to less than 2% in 2024, Trump said. China holds a near monopoly on the production of polysilicon.

The order is likely to benefit Hemlock Semiconductor and Wacker Chemie, which are the main producers of the material in the US. The production of computer chips is central to the race between the US and China to develop artificial intelligence (AI). Washington and Beijing have also been locked in a tit-for-tat tariffs war, which has been on hold since May 2025.

Analyst Views

Analysts quoted by Chinese state media outlet Global Times said the new tariff marks the latest escalation in Washington's efforts to limit China's role in critical technology supply chains. The move follows other US restrictions on the imports of drones, humanoid robots and other tech products from China. China announced a range of countermeasures this week, including tighter export controls on drones.

Beijing also launched a national security review into imported printers and copiers. Related topicsInternational BusinessTradeDonald TrumpEconomicsChinaSemiconductorsMore on this storyTrump administration pays back $100bn in 'Liberation Day' tariffs to businesses Published2 days agoWhat tariffs has Trump introduced and why?

Economists are analysing what the news means for the markets.