Trump and Biden Administrations’ Semiconductor Conflict with China: The Weaponization and Viscosity of Interdependence

<p>The Trump and Biden administration in the US developed and pursued contrasting policies, with the former emphasizing unilateralism whereas the latter strongly emphasizing multilateralism. This widely accepted view may actually require some refinement. Both these administrations shared a common stance in maintaining economic tensions with China and implemented similar unilateral economic sanctions and trade restrictions. These measures weaponized the interdependence between the US and China and was intended to manipulate this economic relationship through political intervention. However, these actions faced resistance from the domestic industries in the US, embodying the viscosity of interdependence. Surprisingly though, the response of this government and the industries, the weaponization, and viscosity of interdependence was to create a united front further leading to the multilateralization of trade restrictions. The American unilateralism and multilateralism were not necessarily conflicting, but rather, existed on a continuum.</p><p>This paper analyzes the case of the semiconductor dispute, and reveals the aforementioned political dynamism. In this analysis, the paper utilizes the weaponized interdependence argument proposed by H. Farrell and A. Newman as an analytical framework; however, it was further modified to include the concept of viscosity.</p><p>The semiconductor dispute differed from conventional economic friction such that it was not triggered by demands for trade restrictions by American industries. It was government-driven and was derived from other economic issues. On the one hand, the Trump administration implemented an increase in semiconductor tariffs under Section 301 of the Trade Act to extract concessions from China in the challenging US–China economic negotiations. On the other hand, the Biden administration faced a global shortage of semiconductors, examined the issues in the global supply chain, thus confirming the US’s dependence on China and China’s growing technological capabilities.</p><p>However, the semiconductor industry of the US resisted the government policies, because they were grounded in the trade benefits with China that formed the foundation for R & D. The semiconductor industry argued that its technological leadership, supported by its R & D, was the key to the security of the US. However, the positions of the US government and industries converged over the multilateralization of restrictions against China. The government aimed to prevent regulatory loopholes with China under the framework of interdependence. Meanwhile, to ensure fairness in a competitive market amid China’s sanctioned status, industries sought the multilateralization of regulations. The above may suggest an inherent tendency that, if interdependence is weaponized, the viscosity of interdependence may surface against the backdrop of economic inconsistencies, causing a contracted equilibrium of interdependence.</p>