A number of tech companies in the US have written to the Trump Administration this week asking the government NOT to hit the products they produce with additional tariffs as the US-China trade war seems to be on the verge of escalating.
When Trump’s administration put Huawei under a trade ban a few weeks ago, a number of tech enthusiasts thought this ban was meant to protect Apple but the reality is not that simple,as Apple itself might be affected by decisions being made in the US.
Apple, Intell, Dell, Microsoft, HP, Sony and Nintendo have all written asking for their products not to be included among those affected by a proposed 25% tariff on $300 billion in Chinese goods not already subject to tariffs. The US government cites need to stop China from stealing US IP as one of the reasons for the tariff. It would apply to a wide range of products, from live buffalo and primates to T-shirts and shoes. It would also cover laptops, video game consoles, battery cases and other products.
Apple wrote to Trumps administration reminding them of their contributions to the US economy (being the largest taxpayer and the 2 million jobs they are responsible for in the country) and how this would be compromised by this tariff. Apple also felt their global position would be compromised if this tariff affects them:
The Chinese producers we compete with in global markets do not have a significant presence in the US market, and so would not be impacted by US tariffs,” Apple wrote. “Neither would our other major non-US competitors. A US tariff would, therefore tilt the playing field in favor of our global competitors.
Apple statement
Microsoft, Dell, HP and Intel wrote a joine letter requesting that laptops and tablets be left out of the products affected if the tariffs are to be implemented. Why? Well, they felt that such a tariff could raise the average price of laptops by $120.
Sony, Nintendo and Microsoft also came together asking that game consoles be excluded from the list.
What’s clear at this point is that, a prolonged trade war isn’t necessarily meant to protect US companies as it will make most of the products consumed in the US more expensive.
4 comments
Apple was told wayback during the Obama administration to move out of China. These companies have been taking American jobs to China and only want huge profits. Trump is right cause China banned Google, Twitter, Instagram and Facebook wayback. The Chinese government then created copies of Google, Twitter, Instagram and Facebook owned by Chinese. Chinese government make it nearly impossible to do business in China but they freely do business in other countries. The Chinese government is forcing foreign companies to submit secret trade information to them but no other government is doing that.
Whilst you may be right on some aspects, you should also consider that the skill and expertise found in China will take years and be costly to replicate in other countries. There will be training of employees, acquiring/building out infrastructure and probably higher labor costs so the companies themselves are not exactly incentivised. The USA also stole Britain’s technology during the industrial revolution so playing guard over IP is a bit hypocritical if we are being frank…
The profits they have been harvesting from China must be used to replicate the same in Taiwan or India. Its the profits these companies are after but there are ruining the economy of the country by outsourcing jobs. Its correct US stole some British tech but however IP property must be recognised all the over world and Chinese government does not offer any IP protection. Huawei is getting trade secret data from the Chinese government and getting patents registered in US from stolen information thats why Trump is saying its stolen US IP.
“……but there are ruining the economy of the country by outsourcing jobs.”
This is actually not true, most jobs in the US are lost due to the proliferation of robots. A lot of manufacturing jobs (especially low skill , repetitive task oriented positions) have been taken up by machines. This has actually made US manufacturers more productive over time and also created many more job opportunities. Those jobs supposedly lost to China would eventually be replaced by robots anyway, i mean it is happening in China, too , automation is leaving a lot of low skilled Chinese unemployed.
Trump is an idiot, if you want to entice American companies to invest more locally, you donot do that by slapping tarrifs on their products, you do it by providing incentives. He also does not seem to understand how tarrifs work. Customs duty is what is paid by locals who import goods, so those tarrifs are being paid by Americans (the tarrifs hurt Americans). These tarrifs can be especially devastating to companies that rely on cheap components coming from China, that they need in order to remain competitive on the global market. Think about it, if say you make TVs and you source some part of the TV (LED maybe) from China because of the attractive pricing. If those LEDs are hit with tarrifs, your production costs go up overnight and your TV is no longer competitive, compared to another TV maker in another country who can source the same component cheaper from China.
Again with regards to IP theft. Starting a trade war all because of IP theft is quite extreme. The reality is that in the event of IP theft there is very little that one can do to seek recourse if perpetrators are from another country. I say extreme because in a trade war, there are no winners more so in our globalised economy. In my view to fight IP theft the US should tighten its cyber defenses, and relentlessly pursue more innovation.
There is a lot of historical evidence that proves trade wars are bad for all economies involved.