Trump Tariffs Primarily Hit Multinational Supply Chains, Harm US Technology Competitiveness



Mary E. Lovely and Yang Liang | Peterson Institute for International Economics

Of the many causes of conflict between the United States and China, disagreements over the treatment of American intellectual property may be the most difficult to resolve. In 2017, the Trump administration formally complained that China has been receiving and benefiting from flows of American knowledge it had not properly acquired. The administration charged further that by various means, including forced technology transfers between joint venture partners, reverse engineering, patent violation, and industrial espionage, China has been and continues to subvert global trading rules and norms to unfairly acquire American technology. Such misappropriation, it further alleged, reduces the return to American innovation, diverts American jobs to China, and contributes to the bilateral trade imbalance. To support its contention, in August 2017 the Office of the US Trade Representative (USTR) launched an investigation under Section 301 of the Trade Act of 1974 into “Chinese laws, policies and practices which may be harming American intellectual property rights, innovation, or technology development.”

Seven months after that investigation started, USTR Robert Lighthizer released a report detailing claims that China undermines US rights in the technology sector, and in April 2018 USTR proposed a list of Chinese exports that could be subject to additional US tariffs of 25 percent.2 The list targets products in sectors that USTR determined “benefit from China’s industrial plans,” such as Made in China 2025, including aerospace, information and communication technology, robotics, and machinery. In an attempt to minimize the pain for American consumers, USTR excluded products such as textiles and apparel, footwear, laptops, and cell phones from the list…


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