Friends don’t slap tariffs on friends. Here are the strategies that will ensure the U.S. wins the race for chips and tech supremacy, according to the Consumer Technology Association

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More than a decade ago, I described the competition we see today from China and in my best-selling book advocated an American counter-strategy centered on our unique strengths in creativity and innovation. comeback.

My premise was correct. China has emerged as an economic behemoth, strategically investing in new technologies and expanding its global influence while cornering the market in many key materials, components and finished products.

China’s covid policies, combined with a recent crackdown on some of China’s most successful tech companies, provide America with a window to rethink our national strategy. By rising to the challenge now, we can ensure that American democracy thrives. In short, if we do it right, our children and grandchildren will enjoy the same freedoms we enjoy today.

Even if Congress and the Biden administration choose to invest in some key technologies to compete with China, this cannot be our only strategy. Our trade and technology policy should recognize our allies, including friendly democracies JapanCanada, Australia, New Zealand and South Korea also respect this freedom.

We must reduce barriers to trade and investment and strengthen relations with our allies.

Five years ago, the United States started several trade wars, fueling inflation and shifting production to new locations, many of which did not have free trade agreements with the United States.

American leaders of both parties view trade as a zero-sum war and trade policy as a vehicle for scoring political points at home and abroad. Our isolated approach to trading is moving in a very dangerous direction—turning what should be a team effort with our friends into a “Hunger Games” strategy.

Isolationist policies aren’t just a drag on American businesses and consumers. They create friction with some of our most important allies. The EU, Japan and South Korea have raised concerns about “discriminatory elements” in President Biden’s signature Inflation Reduction Act (IRA), which he signed into law in August. IRA offers Tax incentives for electric vehicles and stable Energy Equipment manufactured in North America but other US trading partners do not have such allowances. Those rules may even violate WTO rules. They do not make any sense: we cannot exclude important trading partners from the growing American market such as electric vehicles and in the same breath talk about the values ​​and principles that inform our trade relations!

Compare our approach to fees Smoot-Hawley charges Almost a century ago it plunged us into the Great Depression. You don’t need an economics degree to recognize that tariffs aren’t paid by foreign countries, whether they’re friends or foes. Those are taxes paid by American businesses and ultimately consumers.

Since 2018, tariffs have cost US tech companies more $32 billion And growth in productivity and employment has stagnated. “Make in America” ​​and “Buy American” requirements may sound good in theory—but the reality is that higher tariffs and less competition lead to higher inflation. That means more expensive and lower-quality goods and services for American families, businesses, and our federal and state governments. Even eliminating China’s tariffs would help us more than China by dramatically reducing U.S. inflation and lowering our consumer price index. 1.3 percentage points In the medium and long term.

As a nation, our economy is built on strong and mutually beneficial trade relationships that encourage innovation and lower costs for businesses and consumers. We hold regular summits with our trading partners to align on trade policy and avoid unfair or unilateral trade practices, at least in theory. But too often, we have not lived up to our principles and imposed taxes on US allies. Instead, our politicians need to understand that our common belief with our allies in freedom for our citizens and market economies for our businesses drives our shared desire for free trade and investment.

Trade policy instruments can and should be used to advance our shared global objectives. EU to help Ukraine counter Russia’s unprovoked invasion Stopped all payments Imported from Ukraine for one year. The United States took a small step in the same direction, suspending tariffs on Ukrainian steel — but our administration can provide additional support through open trade with Ukraine. By lowering trade barriers between the United States and its allies, we can help develop new technologies to make the world a better place—from fighting climate change to making our communities healthier.

When countries undermine free and fair trade through intellectual property theft or forced technology transfers, we can work with allies to impose consequences. For example, the US He is working with The EU and Japan have for years negotiated new rules to address China’s anti-competitive trade practices. The United States and its allies are working to streamline their controls on the export of critical technologies to our adversaries.

The partnership between the United States and our allies is built on trust. When our political leaders impose tariffs on allies or play favorites with domestic companies, we send the wrong signal: Our relationships and trade agreements are little more than talk and torn paper.

The Biden administration must send the right signal to the world by working with our allies to strengthen the rules-based international trading system, remove trade barriers, and negotiate more trade deals.

Gary Shapiro is president and CEO of the Consumer Technology Association (CTA), the American trade association representing more than 1,500 consumer technology companies, and a New York Times best-selling author. He is the author of the book Ninja Future: Secrets to Success in a New World of Innovation. His vision is his.

The views expressed in commentary pieces are solely those of their authors and do not necessarily reflect the opinions and beliefs. Good luck.

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