US-China Tariffs, Trade, and Technology

Recently, I’ve been pondering the question of tariffs and trade wars, especially the stuff that’s going on between the US and China. I’m sad to say that I am becoming disgruntled. I might even say miffed. I could perhaps go so far as claiming to be peeved.

Let me note from the outset that I’m not an economics rocket scientist. In fact, I’m not a rocket scientist at all, although I’m sure I could play one on TV. I’m just an average “man in the street” engineer who is currently shaking his head in disbelief. But “still and all,” as they say in Ireland, I feel I have a small say in what’s going on, and I’d like to share my cogitations and ruminations with you to see if you agree or disagree.

My Thoughts on Trade

I was chatting to my chum Mike Hall the other day. Mike is the Marketing Communications Manager at SEMI, which is a global industry organization serving the product design and manufacturing chain for the electronics industry.

I think my thoughts match those of SEMI, whose position on trade is rooted in four pillars: Free and Fair Trade, Open Markets, Supply Chain Growth, and Respect for IP (Intellectual Property).

In November 2018, SEMI released its 10 Principles for the Global Semiconductor Supply Chain in Modern Trade Agreements to help guide trade negotiations around the world. These trade principles outline imperatives for sustaining industry growth.

I’m not so sure about trade deficits, which occur when a nation imports more than it exports. Currently, America imports more from China than it exports. Some economists don’t think this is a problem, while others disagree.

To be honest, I find it difficult to wrap my brain around all of the arguments on this one. My knee-jerk reaction is that (a) it would be better to export more than we import and (b) if we do import more than we export, then that’s because we have more money and we want more things.

I would also say that everything only works if we follow the “Free and Fair” trade practices as espoused by SEMI. In turn, this relies on everyone playing fair, with countries treating their workers with respect, paying fair wages, not polluting the environment (which means spending money to keep things clean), not subsidizing their industries (thereby making their products cheaper), and not manipulating their currencies to give them an unfair advantage.

My Thoughts on China

I’ve been fortunate enough to travel around the world with someone else paying for the planes and hotels and other expenses (“It really is the only way to travel, my dear”). If only I could have persuaded them to pick up my bar tabs, I would have been a much richer man.

In particular, in the context of this column, I’ve visited China twice to speak at Electronics Design Automation (EDA) conferences in Beijing. I love the people, the food, and the country, although it has to be acknowledged that — as far as I’m concerned — one sea cucumber (an echinoderm from the class Holothuroidea) is enough for anyone in their lifetime.

Usually, I fly into somewhere, talk at a conference, and fly out again. On one of my China trips, however, I was lucky enough to have a weekend layover, so I joined a coach tour to travel around Beijing, climb the Great Wall, and visit a few souvenir shops (now I’m wondering where I put my hand-carved Chinese Chop).

Some of the big issues many western governments have with China is that of counterfeiting, forced intellectual property (IP) transfers, and outright IP theft. For example, Huawei Technologies Co., Ltd, is a Chinese multinational technology company that provides telecommunications equipment around the globe.

According to The Wall Street Journal, Huawei’s rise is littered with accusations of theft and dubious ethics. Currently, Huawei’s CFO, Meng Wanzhou, is under house arrest in Canada facing extradition to the US. Both Meng and Huawei have been charged with bank and wire fraud with regard to breaking US American sanctions on Iran.

A lot of people are worried that Huawei either has, or may in the future, put backdoors into their equipment. This would be a major concern if they end up supplying a significant portion of the world’s 5G infrastructure (also see 5G Meets 50,000 Fans at Super Bowl 2025).

Huawei and the Chinese government are saying, “Who? Us? We would never do anything like this,” but — in reality — the folks at Huawei will do whatever they are told, and cyber-hacking by the Chinese state has been widely reported.

There’s also the fact that many people in the US (lawmakers, manufacturers, labor groups) claim that China has used practices like wage suppression, currency manipulation, and subsidies to certain industries to give themselves an unfair trade advantage.

My Thoughts on America, Tariffs, and Trade Wars

Wow! I just re-read what I wrote above. This was pure “stream of consciousness.” I didn’t know I had so much to say. Just “wind me up and watch me go.”

In my next column I will share my thoughts on America, Tariffs, and Trade Wars (I will be doing the “stream of consciousness” thing again, so I can barely wait to see what my thoughts are). In the meantime, I welcome your comments on what I’ve said thus far.