The White House says it has strong evidence that China violates U.S. trade law to force companies to give the country their intellectual property, evidence it may use to impose as much as $60 billion in tariffs as early as Thursday.
“We do have very strong evidence that China uses foreign ownership restrictions such as joint venture requirements and foreign equity limitations to require or pressure technology transfers from U.S. companies to Chinese entities. We have strong evidence that China’s regime of technology regulations forces U.S. companies seeking to license technologies to Chinese entities to do so on non-market-based terms,” said an official with the U.S. Trade Representative’s Office who requested anonymity.
The official said the administration also has evidence that China conducts “cyber-intrusions” into U.S. companies to get sensitive information, including trade secrets.
The official declined to say when the administration would make an official announcement regarding any potential tariffs or to outline what specifically the tariffs would do. Multiple reports have said the tariffs will be worth as much as $60 billion. Officials have estimated the U.S. loses about $30 billion to China annually. The officials did not dispute reports that the announcement could be made Thursday.
In testimony before the House Ways and Means Committee Wednesday, U.S. Trade Representative Robert Lighthizer said, “The president is going to make a decision in the very near future … Our view is that we have a very serious problem of losing our intellectual property, which is really the single biggest advantage of the American economy…. We are losing that to China in ways that is not reflective of the underlying economics.”
But he added, “There is no decision until the president makes it.”
The White House initiated an investigation in August into whether it could impose tariffs on China under the 1974 Trade Act. Lighthizer said his staff had extensively reviewed the issue and believed his staff had come up with a formula for tariffs that would apply “maximal pressure” on China. The tariffs would be imposed under Section 301 of the trade act.
The administration official said appealing to the World Trade Organization wouldn’t be particularly useful because China has made few commitments to the international organization. “Not every bad trade action violates the WTO … We’ll use it where we can but we’re not always going to be able to use it to address everything,” the official said.
