Just every other day, there is a new development in the intensifying technology war between China and the United States. Whether it's blocking the servicing of China's advanced chip manufacturing equipment, or blocking Windows and Intel and AMD chips from Chinese government systems, it's a never-ending merry-go-round of tit-for-tat measures and retaliation.

Applying tariffs on imported goods to protect domestic industries is straight from the economic playbook, and that's exactly what the Biden administration did by announcing that it would double the tariffs applied to imported Chinese semiconductors from 25% to 50%.

The White House justifies this rise by claiming that it is aimed at protecting investments made under the Chip Act. Its press release states: "The Chip and Science Act includes 25 billion in investment tax credits of 3 39% for semiconductor companies, as well as direct incentives to build, modernize and expand semiconductor manufacturing facilities. Raising tariffs on semiconductors is an important first step in promoting the sustainability of these investments."

Discussing the benefits of tariffs and the political aspects of this move is beyond the scope of this article, but the burden of these tariff increases is acknowledged to fall on U.S. consumers, which means we may be seeing a situation where the price of hardware we know and love will be forced to rise in price." . 

While expensive items such as Intel, AMD, and Nvidia chips are not affected, PC, laptop, or phone motherboards contain dozens of other controllers and components, many of which are manufactured by Chinese companies. If the price of these components increases, the cost is passed on to the consumer.

The proposed tariffs will not only affect the Chinese chip market, but will also apply to steel, aluminum, electric vehicles, batteries, solar cells and medical products.

If there is one thing that always happens, it is that the Chinese government will respond kindly.1 That is the nature of trade wars. And the whole consumer will bear the cost.