Trump's argument for the US-China Trade War

Imported soy beans in Nantong, China. (AFP/Getty Images)

He has three overarching grievances. The first complaint is unique to his administration, but the second two mimic those of his predessesors. They are:

1. The trade deficit

  • The US exports more goods to China than it imports: Essentially, the US buys more from China (and most other countries) than China (and most other countries) buys from the United States. When Peter Navarro, Trump's director of trade and manufacturing policy, made the case for Trump's tariff campaign in 2018, he said that running a deficit has led to job and capital loss.

2. IP protections

  • Forced technology transfers: Historically, foreign companies have been forced (or pressured) to hand over proprietary technology to Chinese companies in exchange for access to the country's giant customer base. Sometimes, they're required to hand over technology to Chinese companies through a government-mandated joint venture program. Other times, it's to government panels in order to evaluate a project's safety or environmental impact. Much of the justification for the trade war depends on these assertions. Critics alledge that Chinese trade laws allow Chinese firms to gain access to otherwise confidential foreign technology, then incorporate that technology into their own products.
  • IP theft and cyber espionage: China also has a history of stealing trade secrets from major foreign companies and governments. In 2015, Presidents Obama and Xi signed an agreement to end cyber theft of IP and other confidential information. The agreement, however, limited the ban to theft for commercial gain only, leaving the door open to cyber theft for military or other use.

3. Government control of Chinese tech and science

  • China's State Owned Enterprise-led investment in foreign technology: Because many Chinese companies are ultimately owned by the government, their funds (and the instructions they send their foreign start ups) may be determined by the government in Beijing. This is very difficult to prove, but some events, like the failed takeover of Aixtron, a German company that builds semiconductors for missile systems, cast light on what some say are predatory investments in high technology.
  • "Made in China 2025" plan: The government's 10-year plan, released in 2015, is a blueprint to ween China off of high tech imports and become 70% self-sufficient in developing microchips, machine learning, electric vehicles, AI and other technology domestically. Critics say that China relies on the behavior listed above-- forced technology transfers, IP theft, cyber crime and coercive investing-- to acquire the expertise to design and develop advanced technology on its own.
Learn more with Brilliant. Get 20% off today.