The US has announced tariffs of up to $60 billion on China, in response to China’s alleged IP violations.
Before signing a memorandum targeting China’s “economic aggression” yesterday, March 22, Trump identified China as a “particular problem” when it came to unfair trade practices.
He said that the US has a “tremendous IP theft” situation, which equates to hundreds of billions of dollars being lost on a yearly basis.
Last year, Trump ordered the US Trade Representative (USTR) to conduct a study into China’s violations of US IP rights.
“We concluded that, in fact, China does have a policy of forced technology transfer; of requiring licensing at less than economic value; of state capitalism, wherein they go in and buy technology in the US in non-economic ways; and then, finally, of cyber theft,” USTR Robert Lighthizer said.
Lighthizer added that China’s unfair practices were having the greatest impact on the technology sector.
“Technology is probably the most important part of our economy,” he explained. “There’s 44 million people who work in high-tech knowledge areas.”
Lighthizer claimed that the US has the largest technology-intensive industry in the world, branding the industry as the “backbone of the future of the American economy”.
President Trump was joined by Marillyn Hewson, chairman, president and CEO of aerospace defence technology company Lockheed Martin, during the signing of the memorandum.
She identified yesterday’s announcement as a significant step forward in protecting the “lifeblood” of the aerospace and defence industry.
“I would just say that this is a very important moment for our country, in that we are addressing what is a critical area for the aerospace and defense industry, and that is protecting our IP.”
Frank Samolis, co-chair of the international trade practice at Squire Patton Boggs, said that the threat of tariffs has become a negotiating tactic for the US.
“The US has long had grave concerns with China’s record on IP,” he commented. “Just recently, and touched on by the USTR, the technology sector has sounded the alarm on China’s new cybersecurity law, which has been adopted but is being rolled-out towards the end of the year.”
The law enforces certification requirements on the sale of computer equipment in China/ This requires security reviews to deem the equipment is secure.
“Companies have argued this provision could require them to disclose IP, such as source coding, which could then be copied by domestic companies,” said Samolis.
He highlighted that while the tariffs may be a “blunt instrument”, they are addressing ongoing issues that have been a “stumbling block” in trade negotiations between the US and China.
A draft list of goods that the tariffs will affect is expected to be released in the next 15 days.
In response, China said it would retaliate by imposing 15% import tariffs on 120 types of US products. This would include fruit, wine and steel pipes worth $977 million, according to the South China Morning Post.
The country also reportedly has plans to impose 25% import levies on a further eight categories of products worth $2 billion, including pork and recycled aluminum.
Source: WIPR website