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Trump readying ‘all of the above’ fusillade on Chinese tech – TechCrunch

President Trump’s decision to block a mega-merger deal between Broadcom and Qualcomm appears to be just the opening gambit for a significantly bolder strike on Chinese technology and investment firms as well as Chinese nationals learning and working in the United States.

For an administration that is as defined by its day-to-day chaos as its penchant for flashy headlines, it is clear that the package of trade, investment, and immigration restrictions currently being drafted represents the most comprehensive and organized policy planning effort undertaken by this administration yet. President Trump and his administration is serious about bolstering American competitiveness against the growing Chinese economy.

Given the tight constellation of talent, companies, and capital between China and the U.S., the comprehensive package that Trump is increasingly likely to propose in the next few weeks would deeply alter the trajectory of Silicon Valley and technology innovation more broadly.

Tariffs

Politico reported this afternoon that after U.S. Trade Representative Robert Lighthizer presented a package of tariffs to be leveled on China that would total $30 billion, “Trump urged Lighthizer to aim for an even bigger number,“ with sources telling Politico that the new headline number could be $60 billion. Those tariffs would be heavily focused on technology and telecom, although they would not be limited to those sectors.

Last year, the United States trade deficit with China was estimated at $375.2 billion, according to the Bureau of Economic Analysis at Commerce, which was an all-time high.

The Office of the U.S. Trade Representative announced back in August that it had initiated what is known as a Section 301 investigation into China’s intellectual property practices “to determine whether acts, policies, and practices of the Government of China related to technology transfer, intellectual property, and innovation are unreasonable or discriminatory and burden or restrict U.S. commerce.”

It is believed that the results of that investigation could provide the underlying rationale for the new tariffs, as well as other policy changes.

Immigration

The process to secure an H1B visa — the key high-skill visa predominantly used by Silicon Valley companies to bring in foreign workers to the U.S. — has gotten notably harder under the Trump administration. Additional paperwork requests have been made of applicants, and professionals knowledgable about immigration have said that they have experienced significantly higher burdens in getting visas approved.

Rumors in December swirled that the administration would ban H1B extensions when applying simultaneously for a green card — what one person described as a kind of “self-deportation,” as McClatchy’s DC Bureau reported at the time.

Now, it appears the administration is going to focus more intently on limiting Chinese immigration and take a more critical eye to Chinese nationals working in sensitive areas like science and technology, again according to Politico. Such a move could involve blocking Chinese graduate students from attending U.S. universities or preventing Chinese professionals and researchers from collaborating with their American counterparts.

As with all of these changes, it’s sometimes not the changes themselves, but the threat of them that has an impact. The number of foreign students coming to the United States to study for instance has declined by 17% the previous fiscal year ending September 30th, a trend at odds with the previous decade’s growth in foreign student enrollment. Additional restrictions placed on a single country like China could further chill that migration.

Investments

Finally, there is the expansion of the president’s authority to block Chinese investments in the United States, which is currently working its way through Congress. That expansion of power is designed to target minority equity investments, such as venture capital. Additional Treasury Department regulations are currently being drafted that would further restrict Chinese investments, even potentially without a law being passed by Congress.

As with immigration, the threat of such prohibitions could cool the capital markets between the U.S. and China, potentially severely.

In short, Trump is using an “all of the above” approach to target China’s trade practices. These policies are being discussed today, and could change widely over the next few days and weeks as more feedback from government departments and the private sector filter into the White House. But it is clear Trump wants to make a big impact on this issue, and the unusually organized policy process is a harbinger for large changes to come.


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