The tariffs that President Trump slapped on China Thursday seek to help U.S. automakers protect their advanced electric vehicle technologies from being stolen by Chinese rivals.
The White House said the Section 301 investigation that formed the basis for the new tariffs showed the country’s policies were set up to steal technologies from foreign automakers, while placing them at a competitive disadvantage as a stipulation for being given access to the Chinese market.
“The investigation concluded that China uses foreign ownership restrictions, such as joint venture requirements and administrative review and licensing processes to force or pressure U.S. companies to transfer technology to Chinese entities,” according to a White House fact sheet explaining Thursday’s actions against China’s unfair trade practices.
The White House said a prime example of the practice is Chinese requirements that foreign companies, to access the country’s “New Energy Vehicles” market, “transfer core technologies to a joint venture and disclose development and manufacturing technology for the entire vehicle.” The White House called the requirements “a threat to American innovation.”
The White House said the policy “forces U.S. companies seeking to license technologies to Chinese entities to do so on non-market based terms.”
The Trump administration’s probe also found that China “imposes contractual restrictions” for licensing intellectual property and foreign technology in the country, “but does not put the same restrictions on contracts between two Chinese enterprises.” That gives Chinese companies market advantages that are not available to U.S. companies operating in the country.
China wants to become the world’s leading supplier of electric cars, with the government seeking to meet a target of 7 million electric car sales by 2025. Last year’s global electric vehicle sales were just over 1 million, with China accounting for about half of those, according to Bloomberg Technology.
A number of Chinese companies have been ramped up in recent years, including the company NIO, which is positioning itself to be a direct rival to Telsa, Elon Musk’s U.S.-based luxury electric carmaker.
Warren Buffett is backing the trend as an investor in the Chinese carmaker BYD. The companies SAIC Motor, BAIC Motor, Great Wall Motor and Geely Automobile represent a number of Chinese companies looking to dominate the electric car market in the next year.
