U.S. protectionism can trigger digital trade war, expert warns

Updated 2018-03-14 10:15:05 Xinhua

The growing U.S. protectionism may trigger a trade war in the field of technology that cannot be won, a U.S. economic analyst has warned.

With digital flows of commerce and information rising enormously in the past decade, the U.S. government's attention to real commodities, as indicated by imposing tariffs or other barriers, is misplaced, according to Rana Foroohar in a column published in Financial Times Sunday.

A digital trade war is likely to surface following recent protectionist measures by Washington. The U.S. Committee on Foreign Investment's review of Singaporean chipmaker Broadcom's bid to take over leading U.S. semiconductor producer Qualcomm is one of them, Foroohar explained.

Foroohar said U.S. officials are worried that Broadcom, with heavy debts due to the acquisition, would reduce the research and development capacity of Qualcomm, and a strong competitor in the global technology race would thus vanish.

Also, in August 2017, the United States launched an investigation into China's trade practices under the obsolete 1974 Trade Act's Section 301, a trade tool focusing on enforcing intellectual property rights. It was frequently used before the World Trade Organization came into existence and allows Washington to unilaterally impose tariffs on another country's products.

Foroohar said the investigation results, due in summer, may put stricter barriers for Chinese investment in the U.S. data and IT industry, shut out some Chinese giants, like Tencent, and impose new tariffs on a wider variety of Chinese products.

However, many big U.S. technology companies have substantial interests in China, Foroohar said, citing Stacy Rasgon, a semiconductor analyst for the Berstein Research Group.

"Today's worry, of course, is that we start with tariffs on aluminum and steel and end up in a digital trade war that cannot be won," Foroohar said.

U.S. President Donald Trump has adopted several measures so far this year, saying they are meant to protect domestic industries.

Despite mounting dissension from trade partners around the world, Trump this month formally announced a 25-percent tariff on imported steel and a 10-percent tariff on aluminum.

In January, the U.S. administration approved tariffs of up to 50 percent on imported washers for the next three years and up to 30 percent tariffs on solar cells and modules for the next four years.

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