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Do Allegations of Intellectual-Property Theft Justify Protective Tariffs?

Summary:
The title of this post is the title of my latest column for AIER. A slice: When the matter is explored carefully, little justification is found for Uncle Sam’s involvement at all. This reality is revealed by exploring a claim about Apple that Steve Moore made during our debate [at FreedomFest 2019]. Steve said that China is saturated with electronics stores falsely portraying themselves as Apple Stores. Any such trademark theft is indeed unwarranted and ought to be stopped. Yet no one has a more powerful incentive to combat this theft than does Apple. Throughout China, in addition to making a great number of e-commerce sales, Apple operates more than 50 real Apple stores. In 2018, sales in China brought in for Apple .9 billion, which is 20 percent of Apple’s total revenues. Also,

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The title of this post is the title of my latest column for AIER. A slice:

When the matter is explored carefully, little justification is found for Uncle Sam’s involvement at all. This reality is revealed by exploring a claim about Apple that Steve Moore made during our debate [at FreedomFest 2019]. Steve said that China is saturated with electronics stores falsely portraying themselves as Apple Stores. Any such trademark theft is indeed unwarranted and ought to be stopped. Yet no one has a more powerful incentive to combat this theft than does Apple.

Throughout China, in addition to making a great number of e-commerce sales, Apple operates more than 50 real Apple stores. In 2018, sales in China brought in for Apple $51.9 billion, which is 20 percent of Apple’s total revenues. Also, of course, a great deal of assembly of iPhones and other Apple products – products for sale both within and outside of China – takes place in China. I’m unable to find reliable figures for how much taxes Apple pays in China, but this company’s presence in China is most certainly valuable to the Chinese – as consumers, as workers, and as government officials.

The first step in stopping such theft should surely be Apple itself bringing suit within China, or otherwise seeking the cooperation of Chinese authorities. If this step fails, the next step should be U.S. government recourse to the WTO. Only if this second step fails should the discussion even begin about other possible actions by Uncle Sam.

And even then it is not at all clear that higher tariffs on American purchases of imports from China would be justified either economically or ethically. To trust the U.S. government to impose tariffs at home as it acts as an enforcer for private companies that choose to operate abroad is a recipe for cronyism costumed as ethical law enforcement. I cannot muster such trust.

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Don Boudreaux
He is a professor of economics at George Mason University in Fairfax, Virginia. Previously, he was president of the Foundation for Economic Education.

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