By Peter Leroe-Muñoz, Vice President, Technology & Innovation, Silicon Valley Leadership Group
Action: President imposes tariffs on imported Chinese steel and aluminum
Reaction: China responds with tariffs on $3B of U.S. imports
Action: President imposes 25% tariff on $50B Chinese imports (electronics components, batteries, transportation components, etc.) to go in effect in July. The justification – Chinese theft of Intellectual Property (IP) and the reducing trade deficit
Reaction: China responds with 25% tariff on $50B U.S. imports (fruit, cotton, tobacco, select autos), strategically targeting U.S. goods produced in areas that supported Trump in 2016
Action: President and the U.S. Trade Representative create list of additional $200B of Chinese imports that may be subject to a new 10% tariff
Reaction: China announces it will retaliate in kind with equal tariffs on American imports
Action: Administration levies tariffs on $34 billion of Chinese imports
Reaction: Beijing retaliates immediately introducing an equivalent 25 percent tariff on $34 billion in American goods.
What potential ramifications could this have had on Silicon Valley’s tech community?
- U.S. companies rely on imports of information and communications technology (ICT) products to drive innovation, create jobs, and power economic growth in the United States
- Higher prices from tariffs lead to lower consumption of information and communications technology products
- Additionally, the stock values of such goods decrease, which further threatens the strength of Silicon Valley’s economy
What is the “Made-In-China 2025” plan proposed by the Trump administration?
“Made-in-China 2025” is a strategic blueprint issued by the Chinese government for the purpose of transforming China into a global tech leader in the next decade. It identifies ten sectors for special government support, including:
- Next generation IT
- High-end numerical control machinery and robotics
- Aerospace and aviation equipment
- Maritime engineering equipment and high-tech maritime vessels
- Advanced rail equipment
- Energy-saving and new energy vehicles
- Electrical equipment
- New materials
- Biomedicine and high-performance medical devices
- Agricultural machinery and equipment
What can the U.S. Government and Administration do to help?
- Apply multilateral pressure on China that does not inflict harm on U.S. consumers and businesses
- Develop a competitive advantage against China by investing in research and development, education, science and technology, artificial intelligence (AI), and incentivizing innovation
- Remain engaged with the global community in order to combat blatant disregard for international norms and principles of free trade
What is the current sentiment in Silicon Valley right now as it relates to President’s decision on Chinese investment in U.S. based tech companies?
- Foreign partners are essential for funding innovation in the American economy
- There are certain invaluable elements of a business that cannot be fully optimized without the knowledge and insights of a global workforce