China succeeds in blackmailing Trump into approving sales of Nvidia's newest chips to China, while leaving America's farmers without an export market
Trump's impulsive and hastily-constructed trade policies backfire
The United States invented the computer chip in 1947. But now, after 25 years of offshoring, the U.S. manufactures just 10% of the world’s semiconductors and only 8% of the “legacy” chips that keep cars, factories and hospitals running each day. These workhorse chips represent the vast majority of global production. But China currently accounts for roughly one-third of global chip manufacturing — and also possesses a choke-hold on critical minerals, such as gallium and germanium, that make chip manufacturing possible.
China recently announced new rare-earth-mineral export restrictions, after previous restrictions on gallium, germanium and other critical minerals used in semiconductor manufacturing. China has even blocked shipments of key automotive chips from its Nexperia facilities after the Netherlands sought to limit Beijing’s influence — an episode that briefly threatened global car production. This illustrates Beijing’s willingness to weaponize its dominance over critical industrial supply chains.
In 2022, former President Joe Biden signed the Chips Act, legislation that provided incentives for new U.S. chip-making facilities and invested in securing U.S. rare earth element (REE) supply chains through significant funding from the Defense and Energy Departments, using initiatives like the Defense Production Act (DPA) and the Bipartisan Infrastructure Law, to reduce reliance on China. Additional investment support for domestic mining (MP Materials), processing (Lynas), and magnet manufacturing (Noveon Magnetics, Vulcan Elements).
This was all a helpful start, but Donald Trump's impulsive capitulation to China at this point gives up remaining US leverage in return for nothing of consequence.
The Trump administration must remember that chip independence is not just about economics — it’s about survival. Most of the world’s advanced semiconductors are manufactured in Taiwan, a self-governing island that Beijing has repeatedly threatened to invade. If China acted on that threat, the United States would lose access to the technological lifeblood of its economy and military overnight. That is an intolerable risk for a superpower. |
