The US government will slap tariffs on up to $60 billion worth of Chinese imports, primarily in the technology sector, in retaliation to alleged intellectual property (IP) theft and unfair competition practices.
US President Donald Trump signed an executive memorandum confirming the measures, after an investigation in August 2017 found that China’s laws were harming US IP rights, innovation and technology development.
Specifically, the US government said it was taking action against China on four major issues. The first being that China uses foreign ownership restrictions, which requires or pressures technology transfers from US companies to Chinese entities.
Secondly, a government statement said China imposes restrictions on US firms’ investments in China, including restriction on technology licensing terms, which means US companies are forced to license technologies “that unfairly favour Chinese recipients.”
On the third point, the US alleged China obtains cutting edge technologies and IP in areas deemed important for its government’s industrial plans and finally, “China conducts and supports unauthorised intrusions into, and theft from, the computer networks of US companies”, which provides it with access to IP, trade secrets and other important information.
The order detailed plans to release a proposed list of products subject to the tariff increase within 15 days, with CNBC reporting that it could cover 1,300 product lines.
When news broke of Trump’s plans to impose tariffs on China, Reuters reported the main focus will be on information technology, consumer electronics and telecoms equipment.
In comments made upon signing the order, Trump said he was negotiating “reciprocal” trade terms for American companies operating in China.
The US has notably been increasingly wary of national security in recent months, particularly with regards to telecoms and technology.
Just this month, Trump blocked Singapore-based Broadcom’s proposed takeover of Qualcomm, while China-based vendor Huawei has been subject to increased scrutiny in the US.
The company failed to secure a partnership with AT&T earlier this year due to government concerns and its woes in the country look set to worsen. This week, reports emerged that retailer Best Buy is also planning to stop selling its smartphones.
US government officials have also called for a reduction on the use of telecoms equipment manufactured by Huawei and ZTE in the country.