Trump, tech companies in U.S. at odds over China
The Trump administration’s push to prevent China from dominating the market for advanced technologies has put it on a collision course with the same American companies it wants to protect.
Firms that specialize in microchips, artificial intelligence, biotechnology and other industries have grown increasingly alarmed by the administration’s efforts to restrict the flow of technology to China, saying it could siphon expertise, research and revenue away from the United States, ultimately eroding America’s advantage.
The concerns, which have been simmering for months, have taken on new urgency as the Commerce Department considers adopting a sweeping proposal that would allow the United States to block transactions between U.S. firms and Chinese counterparts. Those rules, on top of new restrictions on Chinese investment in the United States and proposed measures that would prevent American companies from exporting certain products and sharing technology with foreign nationals, have the tech industry scrambling to respond.
The Trump administration’s crackdown has already prompted foreign firms to shun
American components and technology over concerns that access to parts they need could be abruptly cut off. U.S. companies are watching warily as the United States considers restricting export licenses for companies that sell products or share intellectual property with China, including General Electric, which sells aircraft parts to China as part of a joint venture with Safran, a French firm.
Top administration officials plan to meet Feb. 28 to discuss further restrictions on China, including whether to block GE’s license to sell jet engines and whether to further curtail the ability of Huawei, the Chinese telecom giant, to have access to U.S. technology.
There is growing bipartisan consensus in Washington that China poses a security threat and that the United States must protect domestic industries to retain a technological edge. But the tech industry has warned that limiting access to China, both in terms of selling and buying products, could cripple American companies and end up undercutting the United States as the biggest global hub of research and development.
“If this administration proceeds with the current trajectory, we’ll see more defections of companies, of scientists,” said Scott Jones, a nonresident fellow with the Stimson Center. “They’ll take their toys and they’ll go elsewhere, and other economies will be the beneficiary of that.”
The most recent source of concern stems from a proposal from the Commerce Department in November to vet and potentially block technology transactions that pose a risk to the United States. The rule would allow the commerce secretary to block transactions involving technology that was tied to a “foreign adversary” and that posed a significant risk to the United States.
The rule grew out of an executive order President Donald Trump signed last year to try to shut out Huawei by authorizing the commerce secretary to bar any purchase of technology designed by a “foreign adversary” that put America at risk. American companies say the regulations are written so broadly that they could give the U.S. authority to block transactions or unwind existing ones in areas far afield from telecom gear.
While tech companies say they support efforts to protect U.S. national security, dozens of companies and industry lobbying groups have expressed concerns about the proposal.
IBM, in a January comment letter, told the Commerce Department to “go back to the drawing board” and said the rules “will lead to a broad disengagement of U.S. business from global markets and suppliers.”
“Its reach, breadth and vagueness are unprecedented,” IBM said.