“Consumers are paying
the price” for President Trump’s tariffs, CNN claims.
Millions will feel the pinch; many thousands will lose their jobs.
What CNN fails to
mention is that millions of Americans already feel
the pinch, and millions more have already lost
their jobs. Why? Chinese consumers won’t pay the price for American
exports: China steals up to $600 billion in American intellectual
property (IP) every year.
that tariffs are a powerful political tool that can — and should — be
used to force China to pay for their crimes.
Most Americans have
only a fuzzy understanding of what constitutes IP. Basically, IP are
ideas; the products of human creativity such as art, branding or
inventions that can be owned and legally protected by registering
copyrights, trademarks or patents. Examples of IP include Beethoven’s
Sixth Symphony, the Daily Caller’s logo, and Tesla’s battery designs.
Needless to say, IP is incredibly valuable — and incredibly easy to
A 2017 report from
on the Theft of American Intellectual Property estimates that
IP theft costs American individuals and businesses between $225 and $600
billion annually. Most of this loss is caused by the theft of American
trade secrets ($540 billion), although software piracy ($18 billion) and
counterfeiting ($41 billion) are likewise significant drains.
report notes that the preponderance of this theft is committed by China.
For example, 87 percent of all counterfeit goods entering America
originate in either China or Hong Kong. This is echoed in a report
published by the Organization
for Economic Co-operation and Development, which found that 60
percent of all counterfeit goods originated in China. The value of
Chinese counterfeits deprived other nations — particularly America —
some $291 billion in income.
A 2018 report
compiled by the United
States Trade Representative likewise found that IP theft
deprived Americans of significant revenue. For example, theft
perpetrated on Chinese e-commerce markets “cause[s] great losses for
U.S. Right holders involved in the distribution of a wide array of
trademarked products, as well as legitimate film and television
programming, music, software, video games, books and journals.”
Although this loss
cannot be specifically stated, we know it’s high. In 2016, Chinese
e-commerce transactions valued $752 billion. Meanwhile, 40 percent of
the products were pirated. Thus, these sales may represent up to $300
billion in lost revenue for Americans.
director of the Counterintelligence and Security Center William
Evanina estimated back in 2015 that cyber-espionage cost
America’s economy some $400 billion annually. This number was
extrapolated from voluntary reporting from 140 American companies
operating in China.
Evanina also claimed
that China’s government itself
was responsible for 90 percent of all cyberattacks—not rogue companies
or lone-wolf hackers. This is textbook economic warfare.
Economic costs aside,
IP theft also undermines the rule of law — particularly at the
international level. China’s theft sets a bad example, while America’s
hitherto weak-kneed response sets a bad precedent: there are no
consequences for stealing American property.
President Trump not
only has the power to impose tariffs on China; he is morally
obligated to do so. After all, the president is ultimately responsible
for protecting American copyrights, trademarks, and patents both here
and abroad. If tariffs help to do this, then they are justified.
Congress and the Media misunderstand tariffs—they are not simply
taxes, they are political tools. Tariffs are a means to an end that
can help secure reciprocity from our trading partners and protect our
IP from foreign theft.
says consumers will pay the price for Trump’s tariffs. Hopefully
they’re right, and Chinese consumers
start paying Americans for our stolen art and technology. Until
then, Trump is right to continue building a tariff wall.
P. Morrison is the editor-in-chief of the National Economics