Today, I testified before the Office of the United States Trade Representative. Click here to download a PDF of the written testimony.
Thank you for the opportunity to testify today. I am Evan Swarztrauber, a senior fellow at the Foundation for American Innovation, a technology policy think tank based here in Washington. My organization believes that technology should serve humanity, individual freedom, and U.S. national security. To that end, I testify in support of USTR’s Section 301 investigation into China’s (the Chinese government) predatory subsidies and other market distortions in the semiconductor industry. USTR should take decisive action to investigate and address China’s aggressive, state-backed efforts to dominate the global silicon carbide wafer (SiC) market. These wafers are key inputs in a wide range of critical areas, including electric vehicles, power grids, radar systems, and missile defense systems. The U.S. must not lose its capacity to produce SiC domestically.
This should be obvious, but it bears repeating: China does not subsidize industries out of generosity. They do so with a clear and deliberate strategy: to undercut foreign competitors, monopolize critical supply chains, and gain leverage to support the economic and security goals of the Chinese Communist Party. We have seen this playbook before—whether with solar panels, LED screens, or lithium-ion batteries. Now, China is deploying the same tactics in the SiC wafer sector. Through massive government subsidies, below-cost pricing, and market manipulation, Chinese firms are working to drive American and allied producers out of business, leaving the U.S. and its partners dependent on Chinese supply. In my view, this behavior is unreasonable, discriminatory, and should merit an actionable determination by USTR.
For too long, the U.S. government had been largely content to let foreign adversaries flood our markets with artificially cheap goods. U.S. trade policy had prioritized short-term savings and consumerism over long-term economic and national security. As a result, Americans watched entire industries and communities collapse.
The outdated approach ended when President Trump was first elected in 2016, and there is now substantial bipartisan support for protecting high-tech American manufacturing. The CHIPS Act represents a major effort to atone for past sins, which is especially important given China’s increasing aggression toward Taiwan and elsewhere in the Pacific. Yet, unsurprisingly, China is taking steps to undermine our progress, specifically by flooding the market with heavily subsidized SiC wafers.
These wafers enable high-performance electronics used in electric vehicles, power grids, telecommunications, and advanced military systems. Without a secure and competitive domestic supply, the United States risks falling behind in these strategic industries, leaving us vulnerable to supply disruptions and economic coercion, especially in the event of war.
USTR should conduct a thorough and robust investigation into China’s actions in the SiC market and take any and all necessary measures to counteract these distortions. America’s blanket 20% tariff on China is welcome but insufficient to correct for China’s excess subsidies and distortions on particular products like SiC. USTR should consider a significantly higher and targeted tariff for these PRC-produced wafers as well as final products that use PRC-produced SiC.
Second, USTR should investigate how Chinese state-owned and state-affiliated firms use third countries as a loophole to evade U.S. trade restrictions and hide their ownership interests. While more facts are yet to come, the advancement of the Chinese AI startup DeepSeek is a potential example of how China uses shell games in Singapore and other nations to avoid sanctions, exploit U.S. technology, and steal intellectual property.
Third, the U.S. government should use its purchasing power to prioritize domestically produced SiC wafers and semiconductors, especially for military purposes. There is no reason that American taxpayers should be subsidizing a Chinese rope to hang us, when they could instead help build an American life raft for SiC production.
When it comes to China’s trade practices, we may have learned our lesson. But learning a lesson is no use if not implemented. We must act decisively to protect our capacity to build SiC domestically both for current use cases and those we cannot yet imagine. Thank you for your leadership and public service on this vital issue, and I welcome any questions.
Evan Swartztrauber
