Retail giants rail against US-China tariffs

Walmart and 24 other retail giants have spoken out against President Trump's tariffs on Chinese imports in to the USA. The Retail Industry Leaders Association ("RILA") has claimed that the tariffs will lead to higher costs for retailers which will be passed on to consumers.

The tariffs have been imposed by the President as part of his attempt to stem the flow of jobs, technology and intellectual property from the USA to China. He has said (and Tweeted) that Chinese companies are, by legitimate means or otherwise, acquiring American technologies and then selling them back to American businesses, undercutting US rivals.

The President's tariff does not target the separately pursued illegal copying that is an ongoing issue with China for all jurisdictions.

At present a common business model for Chinese companies is to acquire an American technology firm, assign the intellectual property rights to the Chinese parent company and begin production of the technologies in China entirely legitimately. They can then sell the products on the American market at a significantly lower price than American manufacturers are able to.

While this seems like a convoluted and tedious process, it allows Chinese companies to buy up intellectual property rights they would otherwise be unable to access legally, and to undercut American manufacturers in the process.

The retailers which oppose these tariffs are claiming that by preventing the Chinese undercutting that American firms will face no competition, driving up prices at wholesale, which will in turn drive up prices for the consumer.

They further argue that the tariffs will not only stop this undesirable practice, but also drive up the price of goods widely sources from China.

If you have any questions on the above, please do not hesitate to contact the team at McDaniel & Co. on 0191 281 4000 or legal@mcdanielslaw.com.