USC experts talk about the importance of U.S.-China trade and how it affects the economy. (Illustration/iStock)
Tuesday saw the historic signing by President Joe Biden of a measure providing $52.7 billion in subsidies for American semiconductor research and production as well as stepping up initiatives to make the U.S. more comparable with China’s scientific and technology initiatives.
The future will be created in America, according to Biden, who described the initiative as a memorable investment in the country.
Biden applauded the contributions that chip companies are making despite the fact that it is unclear when the U.S. Commerce Department will set guidelines for assessing grant applications and how long it will take to fund projects.
On the White House Lawn, some Republicans merged with Biden to witness the signing of the long-awaited chips bill.
The signing was attended by lawmakers, the governors of Pennsylvania as well as Illinois, the mayors of Detroit, Cleveland, and Salt Lake City, as well as the chief executives of Micron (MU.O), Intel (INTC.O), HP (HPQ.N), Lockheed Martin (LMT.N), and Advanced Micro Devices (AMD.O).
The White House claimed that new chip investments had been stimulated by the bill’s passage. It mentioned that Qualcomm’s (QCOM.O) commitment to purchase semiconductor chips from the well-sought GlobalFoundries’ (GFS.O) Manhattan factory increased to a supplemental $4.2 billion on Monday, totalling $7.4 billion through 2028.
The White House further highlighted Micron’s announcement of a $40 billion commitment to memory chipmakers, which it claimed was planned with projected funding from the Chips Bill and would increase U.S. market dominance from 2% to 10%.
On August 9, 2022, Vice President Kamala Harris, Speaker of the House Nancy Pelosi, and U.S. President Joe Biden sign the CHIPS and Science Act of 2022 on the South Lawn of Washington’s White House.
Biden emphasised on Tuesday that this law does not give firms blank checks, contrary to the progressives’ claims that it is a handout to profitable semiconductor companies who have previously abandoned U.S. facilities.
The measure aims to address a persistent shortfall that has affected a wide range of items, including cars, weapons, washing machines, and video games. Thousands of cars and trucks are still stuck in southeast Michigan whilst waiting for chips as the shortfall threatens to hurt automakers.
The bill also contains a 25% investment tax incentive for chip facilities, which is worth an estimated $24 billion, marking a rare significant entry into American industrial policy.
The law grants $200 billion over ten years to advance American scientific research so that it can compete more effectively with China. To compensate for those settlements, Congress would require to take over separate and different appropriations legislation.
China had opposed the semiconductor bill through lobbying. According to the Chinese Embassy in Washington, China vehemently disagrees with it and says it is reminiscent of a Cold War attitude.
Biden pointed out that crucial weaponry like the Javelin missile system requires chips for the US. It’s understandable why the Chinese Communist Party vigorously fought against this bill, according to Biden.
Many American legislators had stated that they typically would not approve substantial subsidies for private enterprises but pointed out that China, as well as the European Union, had been giving their chip companies billions in incentives. They also mentioned anxiety about national security and dominant issues with the global supply chain that has hindered the growth of the global industry.
Meanwhile, in the U.S. labour sector of things, The Labour Department started tracking worker productivity in the United States in 1948, and in the second quarter, it plummeted at its sharpest annual rate ever. At the same time, unit labour expenses grew quickly, suggesting that strong wage demands will continue to support high inflation.
According to the agency, nonfarm productivity, which gauges the output per hour of labour, decreased by 2.5% from a year ago on Tuesday. Additionally, it fell significantly in the second quarter at an annualised rate of 4.6% after falling by an optimistically revised 7.4% in the year’s first three months.
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