US and China trade war resumes as new tariffs announced

US President Donald Trump has said he will impose a 25% tariff on $50 billion worth of goods imported from China containing “industrially significant technology” to help protect IP.

This comes despite the US and China agreeing on May 19 not to impose tariffs on each other.

On March 22, Trump signed a memorandum announcing that the US would take steps in protecting US IP and domestic technology from “discriminatory” trade practices, announcing plans to enforce tariffs of up to $60 billion on China. 

The March memorandum was signed after a US Trade Representative report into China’s practices in technology transfer, IP and innovation. The investigation found, among other things, that Chinese firms require licensing from US companies at a less than economic value and highlighted “Chinese state-directed acquisition of sensitive US technology for strategic purposes”.

But earlier this month, China and the US pledged not to launch a trade war. Instead, they agreed to cooperate in promoting the development of the Chinese economy, “meet the people’s needs”, and contribute towards helping the US reduce its trade deficit.

Despite that truce, yesterday, May 29, the White House said that the US will impose a 25% tariff on $50 billion of goods imported from China containing “industrially significant technology”. A final list of affected goods will be announced by June 15 and the tariffs will be enforced shortly afterwards.

In addition, the US will implement specific investment restrictions and enhanced export controls for Chinese entities that relate to the acquisition of “industrially significant technology”.

These investment restrictions will be announced on June 30 and implemented shortly afterwards.

Lastly, the White House said it will continue to pursue litigation at the World Trade Organization (WTO) against China. In March, the US filed a complaint at the WTO accusing China of breaking WTO rules by denying US companies “basic patent rights”.

“For many years, China has pursued industrial policies and unfair trade practices—including dumping, discriminator non-tariff barriers, forced technology transfer, over capacity, and industrial subsidies—that champion Chinese firms and make it impossible for many US firms to compete on a level playing field,” said the White House.

According to the US, China has “aggressively sought to obtain technology” from US companies and undermine US innovation and creativity.