The 21st century will be led by the nation that best prepares for the future of technology.
President Donald Trump's high-stakes Game of Tariffs with China does little to further that goal. Yes, it could help the United States protect its companies' intellectual property rights and pressure China to stop its unfair trade practices. But it takes the focus away from what his administration, Congress and the technology industry should be doing:
- Investing in infrastructure needed for a tech-based economy that will be dominated by artificial intelligence, robotics and breakthroughs in energy, medicine and transportation.
- Ensuring the United States is the world leader in research and development.
- Producing well-educated youth capable of leading the next wave of innovation and providing the workforce needed to support the new businesses that emerge.
- Winning the talent war, which requires comprehensive immigration reform that would ensure that the best and brightest minds from around the world bring their ideas and energy to the United States.
China last Monday retaliated against Trump's $200 billion worth of new tariffs on Chinese goods by slapping levies on $60 billion of products imported from the United States. The escalation of the trade war caught investors by surprise, sparking major losses for some of tech's biggest companies, including Apple, Intel, Microsoft, Tesla, HP and Nvidia. Tech stocks on Tuesday recovered some of their losses, demonstrating that uncertainty is never good for business.
The world cannot afford a trade war that could spark a serious recession. The U.S. economy may be strong, and China has rebounded from its 2018 setback. But Europe and South America are struggling to hold their economies together.
The last time a U.S. president tried to go it alone with protectionist policies, it led to the Great Depression. As much as Trump insists that the United States can win a trade war, history says it's a losing strategy.
That said, the United States cannot ignore China's ambitious effort to become the world's technological leader by 2049. Rep. Ro Khanna, D-Santa Clara, predicted Monday that China would continue subsidizing its tech firms during a trade war while U.S. companies could face a massive decline in revenue. The only alternative would be significant increases in prices for tech products. Consumers could see the price of an Apple iPhone jump by as much as $150.
Trump is right when he says China is failing to play by the rules of international trade. He should continue to negotiate for a more level playing field for American firms.
But he must not employ a strategy of short-term victories at the expense of the technology industry's future needs.