Americans know about having chips on the line – but Congress seems hell-bent on disconnecting trade provisions from pending legislation to focus solely on semiconductor chips – instead of a bigger China package that is needed by the retail and trade communities. Unless there is a Congressional miracle, critical trade items like GSP and MTB renewals, China exclusions, and de minimis – will slide into the D.C. swamp later this week – perhaps to return in the lame duck session or sometime next year.
Media attention has suddenly turned to our USA ‘national security’ in an effort to gain additional support for ‘CHIPS only’ legislation before Congress breaks for their August recess. Even America’s Secretary of Defense (Lloyd J. Austin III) said in a statement: “Weapons systems employed on the battlefields of today and emerging technologies of tomorrow depend on our access to a steady, secure supply of microelectronics. The Investments made through the CHIPS Act are critical to our national security and will directly support maintaining America’s technological and military edge.”
Clearly, what started out as a bipartisan effort to invest in American technology has now morphed into ‘CHIPS only’ because the Democrat controlled Senate/House/& White House can’t quite pull in the same direction at the same time. Senator Schumer’s (D-NY) original Endless Frontier Act now looks more like Davy Crockett’s last stand at the Alamo. The Senator’s original bill was completely broadened and renamed to become the U.S. Innovation and Competition Act (USICA) when it passed the Senate more than one year ago. Parallel legislation passed the House about six months ago, and that was called the America COMPETES Act. Both bills, (USICA & COMPETES), are quite large in scope (and pages) as they target USA computer chip manufacturing and a host of other trade remedies in an attempt to create a strategic advantage over China – by means of domestic investment.
Merging the Senate bill and the House bill has been proceeding through a process called reconciliation. The procedure is complex and (unfortunately) the negotiations have bogged down and stalled. With the mid-term elections rapidly approaching, and Congress getting ready for their August recess – last minute plans have developed to extract survivors from the process because failure is quickly becoming an option. Democrats remain nervous about getting legislation passed and Republicans don’t necessarily want to give the Democrats a victory. However, both sides realize the importance of American made semiconductors. The latest plan is to shrink the package and offer a ‘CHIPS only’ or a ‘CHIPS PLUS’ package. Unfortunately, without adding any of the retail requested trade components, the end result is right up there with walking out of a fish & chips pub – and saying that they ran out of fish (sorry – we just have chips).
The Administration likely sent Commerce Secretary Gina Raimondo for media rounds this past week – working to get any version of the original USICA or COMPETES Act passed. The media push is directed towards the need for ‘national security’ and the fact that chip makers will likely take their business elsewhere with rising chip demand. The CHIPS bill itself contains an initial $52 billion dollars for USA research and development of chip manufacturing. The original CHIPS Act was part of the National Defense bill that passed in January of 2021 and CHIPS was outlined at that time but not funded. The Senate USICA and the House COMPETES Act would have created the funding (when passed).
The problem with a ‘CHIPS only’ package for USA retail, USA trade, and USA inflation – is that both FULL master bills from the U.S. Senate and the House of Representatives contain items of extreme interest to the retail community…
Read More: Retail Agonizes About Trade Provisions