ITIF Report Critical of Tariffs Urges ‘Alternative Policy Measures’ to Curb Chinese

The Trump administration’s proposed Trade Act Section 301 tariffs on a third tranche of Chinese goods worth about $200 billion in customs value “would target many key components that make cloud computing possible,” reported the Information Technology and Innovation Foundation Tuesday. The administration “in theory” initiated the tariffs to “counteract unfair Chinese trade practices and improve U.S. competitiveness,” said ITIF. “But their practical effect would be to advantage foreign technology competitors, thereby threatening U.S. leadership in both the adoption and provision of cloud computing, and stunting U.S. economic growth,” it said. Though Chinese “innovation mercantilism” is a “laudable and necessary mission,” the administration needs to “seek alternative policy measures that do not raise the cost of key productivity -- and innovation-enhancing capital goods and services such as information technology and cloud computing,” it said. ITIF fears that tariffs would raise prices for businesses and consumers and force cloud-service providers to cut costs through job reductions or curtail spending on new data centers or the R&D “needed to stay ahead of international competitors,” it said. It also worries that cloud providers “may be forced to invest elsewhere to remain competitive,” it said. Tariffs also “threaten to disrupt finely crafted global supply chains for the manufacture of information-technology products,” it said. Those supply chains can’t “easily be reinvented in the short term without significant detriment to, and dislocation of, U.S. industry,” it said.