After last week’s trade negotiations ended without a new agreement, both the United States and China appear to be conceding very little. Effective May 10, the Trump administration increased tariffs from 10 percent to 25 percent on $200 billion worth of Chinese imports. In response, China has now threatened to retaliate by placing tariffs of its own on $60 billion in U.S. exports to China.
Trump himself appears to be both patient and comfortable with his tariff-driven negotiation strategy, indicating that China has more to lose in a prolonged trade war than the United States does.
Speaking to reporters at the White House Monday, President Trump defended his position, stating, “We will be taking in tens of billions [in tariffs from China]. …This is a very positive step. I love the position we are in. There can be some retaliation [from China], but it can’t be very substantial by comparison.”
However, economists, including Trump economic adviser Larry Kudlow, are concerned that new tariffs will eventually affect the price of consumer goods as negotiations are drawn out, and this will be felt by American consumers. This includes a number of popular electronics manufactured in China and sold in the United States.
The U.S. tariffs are also likely to affect the costs American companies pay to do business in China. As a result, a number of companies may need to seek to move their operations elsewhere, depending on how long a trade deal remains unresolved.
Summarizing the trade meetings that took place in Washington last week, Trump stated, “We had a deal with China. It was 95 percent there, and then my representatives … went to China and were told the things that were fully agreed to were not agreed to. I said, ‘Fine. Put on the tariffs.’”
China’s Theft of U.S. Technology & Trade Secrets at the Heart of Negotiations
While campaigning for the presidency, Donald Trump vowed to be tough on China for stealing U.S. technology and trade secrets. His new tariffs and latest rhetoric appear to make good on that promise.
China, through its state-owned companies and network of spies, has earned its reputation for stealing American intellectual property in a number of ways—from copying patented technology, to counterfeiting popular U.S. brands, to conducting sophisticated computer hacking and other forms of espionage. Indictments made against Chinese companies and individuals during the past two years have increased dramatically, primarily in response to an upsurge in technology and defense-related thefts of intellectual property.
American technology and trade secrets have also been compromised by China’s policy of ‘forced technology transfer,’ whereby American companies are forced to divulge technology or offer inexpensive licenses to Chinese companies in order to gain entry into the Chinese market.
The Trump administration has estimated that China’s theft of intellectual property equates to $500 billion in lost revenue per year for American companies.
Last year, former Attorney General Jeff Sessions vowed to increase resources within the Department of Justice to indict in cases of technology and trade-secret thefts. He stated, “Chinese economic espionage against the United States has been increasing—and it has been increasing rapidly. Enough is enough.”
Sessions also criticized China for violating an agreement reached under the Obama administration, whereby both governments agreed not to support cyberattacks to steal corporate secrets.