U.S. trade and investment restrictions: laudable but costly goals

Christine McDaniel, Yeutter Institute

Copyright © 2023 Christine McDaniel

Abstract

U.S. Commerce Secretary Raimondo’s recent visit to China resulted in the announcement of a new “export control enforcement information exchange” between the United States and China. The laudable goal is to prevent China from using U.S. technology for military purposes against the United States or our allies. An information exchange may be a way to explain things to each other, but the fact remains that the export controls are indeed in place. China represents large revenue streams for three of the largest US chip producers—about 20% for Nvidia, 60% for Qualcomm, and 20-30% for Intel. If these U.S. companies cannot license or export to China, then their revenue streams will decrease, and that can translate into smaller margins, less hiring, and less spending on research and development. U.S. officials have been coordinating with other countries to ensure they participate actively in the strategy. Without coordination among key suppliers, China will circumvent U.S. export controls and access the U.S. technologies from another source.