All budding superpowers need to care about semiconductors. The incoming US administration is no exception, so it looks to craft an aggressive yet economically sustainable chips policy. These policies would need to hit China economically, support domestic manufacturing, and boost US innovation, all while avoiding costs to the taxpayer.
It’s a tall order. The outgoing Biden administration spent billions subsidizing domestic chip production. The new Trump administration could cut this spigot. But it can still defuse the China challenge by targeting key strategic industries with tariffs, which in turn could boost US manufacturing.
Drones
The commercial drone market, valued at $4.3bn in 2024, is taking off. Drones are strategic, used in agriculture, mapping, and defense.
But Chinese manufacturers, led by DJI, dominate drones. Like with solar panels, lithium batteries, and electric vehicles, China has used its tried and tested playbook, leveraging forced labor and other unfair trading practices.
State-subsidized unfair competition backed with dirty tricks should be countered proactively, rather than waiting for damage to American and European industries. Although China looks set to see drones as strategic, blanket tariffs would hurt American corporate and agricultural users. Chip-based tariffs are tricky, because no obvious Chinese chip acts as the “brain” of the drone that can be targeted.
Rather, the US should target printed circuit boards. Like all consumer electronics, drones run on specific printed circuit boards typically assembled in a specialized facility. The printed circuit board controls the drone. These printed circuit boards can be assembled in low-cost countries such as Vietnam, Malaysia, or China itself.
The US could impose a 100% tariff on drones containing Chinese-assembled printed circuit boards. The tariff should be on the drone itself, both to maximize tariff revenue and to force a design-out of Chinese-assembled printed circuit boards by non-Chinese manufacturers. China could counter by shifting drone production to other countries, but this would result in loss of control, Chinese know-how, and jobs – all desirable effects. Authoritarian states such as Vietnam could also be targeted by this specific tariff, if they are seen to be acting under orders from Beijing.
These moves would incentivize manufacturers to shift drone printed circuit board design and production to the US or Europe. With government support, such as under the Defense Production Act, there should be capacity to replace Chinese printed circuit board production and to sustain increasing demand.
Bans on security grounds are legitimate. The US has already banned Chinese security cameras for federal use under the 2019 National Defense Authorization Act, so why not high-end drones? Selective bans should be considered on Chinese drone makers supplying Russia for its war in Ukraine. The evidence bar need not be set high, with the onus of proof put on the Chinese manufacturers to show they do not supply Russia.
Electric Vehicles
Electric vehicles will play a central role in combatting climate change, once renewable electricity generation and energy storage are rolled out. China is rapidly advancing its own car production, with low-priced Chinese EVs becoming popular in the US and Europe. While several manufacturers rely on Nvidia for chips in their EVs, they are designing proprietary chips to reduce dependency on the US.
This success poses serious security concerns. We do not want Xi Jinping issuing orders that trigger actions programmed into the Chinese chips in our cars. A total ban should be imposed on Chinese EVs with chips from Chinese companies such as Horizon Robotics. EVs, especially as they become autonomous, should be considered critical infrastructure.
This is why Huawei was banned from 5G telephone networks. A ban on Horizon Robotics would boost the EV chip startup ecosystem in North America and Europe, and compensate Nvidia, the current leader in the EV chips market, for its probable loss of Chinese revenue.
The US also needs to target the critical minerals in the EV supply chain. Chinese owners of lithium and copper mines should be sanctioned based on human rights abuses. Such moves would undermine Chinese dominance of EV supply chains.
Smartphones
Smartphones are everywhere. Unlike drones, the US and Europe cannot simply absorb the huge volumes for their assembly, as Apple founder Steve Jobs famously explained to President Barack Obama. So blanket tariffs are unfeasible. Export controls on American chips are also proving difficult, since China is designing chips to use in its own smartphone brands.
However, targeted bans could be effective. Any smartphone with a camera containing a Chinese-designed system-on-chip (the control center for the camera) represents a potential security threat. This policy would target HiSilicon, the chip division of Huawei, and any brand using Chinese chip systems, while benefiting US leaders Qualcomm and Apple who design their own smartphone chips. Global leader Samsung of South Korea would be prevented from using Chinese parts in order to retain their US market share.
Chinese retaliation against Apple and Google phones might backfire, since these brands are more desirable for the Chinese public than the Chinese brands are in the US. A chip ban would put pressure on small brands like Sony and Nokia to avoid using Chinese chip systems, depriving China’s semiconductor industry of critical revenue streams.
TikTok: Data Security and Economic Penalties
TikTok, owned by China’s ByteDance, continues to pose US data security concerns despite storing data in Virginia and Oregon. Recent reports suggest data transfers to China still occur despite previous assurances.
An outright ban is politically sensitive, given the platform’s popularity. Instead, imposing steep fines for data breaches and potential censorship could be warranted. These fines could be increased for repeated violations. It is difficult to see how Beijing could counter with measures against US platforms such as WhatsApp or Facebook, since both are already banned in China.
The Trump administration will take actions that can be implemented unilaterally, hoping to bring along allies. These measures are proposed in that spirit. They would allow the US to target China where it hurts – economically and strategically – without costing taxpayers, while boosting American tech and manufacturing.
Christopher Cytera CEng MIET is a Non-Resident Senior Fellow with the Digital Innovation Initiative at the Center for European Policy Analysis. He is a technology business executive with over 30 years of experience in semiconductors, electronics, communications, video, and imaging.
Bandwidth is CEPA’s online journal dedicated to advancing transatlantic cooperation on tech policy. All opinions expressed on Bandwidth are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.
2025 CEPA Forum Tech & Security Conference
Explore the latest from the conference.
