Global financial markets were once again swept-up in a wave of trade war-related concerns, with several U.S. and Chinese tech sector stocks thrown deep into the red.

The activity comes as the U.S. intensified its protectionist rhetoric with respect to industries sensitive to national security.

In August 2017, U.S. trade representative Robert Lighthizer had formally initiated an investigation of China under Section 301 of the Trade Act of 1974.

The probe was enacted to determine whether acts, policies, and practices of China’s government, where related to technology transfer, intellectual property, and innovation, may be found “unreasonable or discriminatory and burden or restrict U.S. commerce.”

The initiation of the investigation followed a mid-August memo by U.S. President Donald Trump that emphasized the U.S. as “a world leader in research-and-development-intensive, high-technology goods,” and that “violations of intellectual property rights and other unfair technology transfers potentially threaten United States firms by undermining their ability to compete fairly in the global market.” 

The President’s memo further noted that China’s conduct “may inhibit United States exports, deprive United States citizens of fair remuneration for their innovations, divert American jobs to workers in China, contribute to our trade deficit with China, and otherwise undermine American manufacturing, services, and innovation.”

Among the Section 301 investigation’s findings, China was found to direct and facilitate “the systematic investment in, and acquisition of, U.S. companies and assets by Chinese companies to obtain cutting-edge technologies and intellectual property and to generate large-scale technology transfer in industries deemed important by Chinese government industrial plans.”

Made in China

With China reportedly accelerating its financial support for its “Made in China 2025” strategy, where emerging new technologies such as the Internet of Things (IoT), smart appliances and high-end consumer electronics have surfaced to the forefront of the country’s innovative approach to manufacturing, the U.S. has become increasingly wary of Chinese interests in its domestic tech arena.