Donald Trump to announce Chinese intellectual property investigation

For years now the Chinese business community has shown itself to be extremely nimble when copying and replicating branded products and intellectual property. It has proven almost impossible to bring about any legal actions because of China’s protective regime and business practices. However, this week Donald Trump is expected to call on his chief trade adviser to announce an investigation into Chinese intellectual property.

Why now?

As ever there seems to be an ulterior motive with Donald Trump’s expected probe into Chinese intellectual property activities. This move had been expected a number of weeks ago but was allegedly put on the backburner as the North Korean crisis grew. The hope was that the Chinese authorities would assist Donald Trump in attempting to rein in the North Korean government and reduce the chances of a nuclear war. Initially, the Chinese government was supportive when voting in favour of UN sanctions but privately Donald Trump believes they did not go far enough.

Donald Trump to announce Chinese intellectual property investigation
Donald Trump to announce Chinese intellectual property investigation

More trade restrictions

On the surface this move should help to protect US businesses, brands and intellectual property rights. Billions upon billions of dollars of sales are lost to copycat products produced in China and often sold around the world. So far the Chinese government has been fairly quiet on the issue but there is no way it will sit back and let Donald Trump dictate the future activity of Chinese businesses. So, what could be on the horizon?

At this moment in time, although we know issues involving Donald Trump can change in an instant, it looks as though trade restrictions on Chinese products will eventually be introduced. This should help to protect US intellectual property rights but what if the Chinese government plays a tit-for-tat strategy and announces trade restrictions/tariffs on US products?

More uncertainty

While there is no doubt that intellectual property rights have been abused by many businesses around the world, a number of which emanate from China, the forthcoming battle with the Chinese authorities creates more uncertainty. Supporters of Donald Trump will say that he is taking the difficult decisions that many previous presidents have avoided while others will suggest he is simply picking yet another fight. Picking fights with the European Union and North Korea obviously have their dangers but picking a fight with arguably the largest economy in the world, in the shape of China, could impact trade and diplomatic relations.

In some ways you could argue that Donald Trump has been good to his word when he promised to protect US businesses. You could argue he is taking decisions which should have been taken many years ago but the problem is the consequences, what will they be?

International trade

History shows us that when one country introduces tariffs and trade restrictions others will follow suit and very quickly the situation becomes extremely complicated. Just a couple of weeks ago we saw Donald Trump champion the US steel industry amid rumours he was about to introduce tariffs to restrict the import of cheap steel from Asia. So far, like many promises from Donald Trump, these steel tariffs have yet to emerge so until we see the announcement of a formal investigation into Chinese intellectual property perhaps investors should just ignore any potential impact?

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