Manufacture This

The blog of the Alliance for American Manufacturing

An aggressive policy is worth pursuing.

The Trump administration today announced a 25 percent tariff on $50 billion worth of Chinese goods, which it has identified as having profited from intellectual property (IP) theft.

This has been an expensive problem for years. The Obama administration went to work on it; President Obama and President Xi Jinping agreed in 2015 that “their governments would refrain from computer-enabled theft of intellectual property for commercial gain,” a year after it indicted Chinese military officers for engaging in industrial espionage against American companies.

With all due respect to that administration, it hasn’t worked. Chinese-sanctioned cyber-theft, either by hacking or of the "legal" variety – when foreign firms that want Chinese market access are forced to partner with a domestic company and share IP, for example – continues.

In comes the Trump administration, making good on a tariff threat it had telegraphed for months.

While that threat has been clear, Trump’s wider approach to his China trade policy has been muddy. Many observers focus on the erstwhile steak salesman’s preference for unilateralism, but what’s more concerning is his willing confluence of trade and security.

And it’s hard to say what we’re getting out of it. Remember a couple of weeks ago? When Trump went out of his way to bail out a Chinese telecom giant his administration had just banned from purchasing American technology? A telecom giant that repeatedly broke U.S. law and is considered by the American intelligence community to be a passthrough for China’s spies? That was an enormous bone thrown to President Xi (still around, now probably president for life) and it hasn’t resulted in anything useful – and increased soybean exports don’t count.

Anyway, here’s how it was analyzed in the Washington Post:

Trump, by comparison, has connected the arenas (of politics and economics), potentially giving China leverage over the U.S. trade negotiators. For example, Beijing can offer modest trade concessions in return for pledges to support ongoing talks between Trump and North Korea’s Kim Jong Un.

“For various reasons, maybe including trade,” Trump told reporters last month, “President Xi could be influencing Kim Jong Un.”

It’s clearly not perfect. With President Trump, it rarely is. But, in this instance, the administration’s aggressive approach is due. It’s not like this program of IP hasn’t been addressed before. Hopefully, a hardened stance will force change from Chinese policymakers. Probably not. But worth giving a shot. 

Said Alliance for American Manufacturing President Scott Paul:

"For too long, American businesses and workers have suffered devastating losses due to China's unchecked cheating. These targeted tariffs are the right thing to do for our workers, our economy, and our future.

"While we support the administration's action today, there is still much left to be done. Restricting Chinese investment, pursuing multilateral trade cases against Beijing, and defending our farmers and workers who may be unfairly targeted by Chinese retaliation must also be priorities."