The U.S. exports ideas.
Look at technology, pharmaceuticals, and software, and you see American innovation.
A 2020 report by the U.S. Patent and Trademark Office (USPTO) found that IP-intensive industries accounted for 41 percent of U.S. GDP, roughly $7.8 trillion, and supported 63 million jobs (about 44 percent of total U.S. employment). The U.S. leads in patent filings, with over 600,000 applications in 2023 according to the World Intellectual Property Organization (WIPO), and dominates global markets in IP-driven fields like Hollywood films, Silicon Valley tech, and pharmaceutical innovation.
U.S. ideas are what economists and business people call Intellectual Property, or IP, a term you will hear frequently on business news channels.
Currently, the people with the great ideas are usually in the U.S., and the people who build those ideas are in other countries, notably China.
What happens when a company in another country is in possession of your ideas? In recent years, theft happens.
On the Chinese shopping site AliExpress, you can get just about everything. If you look closely enough, you can find a $1 knock-off of Apple AirPods. They look identical to the $170 AirPods in every detail but one: They don't have the Apple logo. Are they a knockoff or are they AirPods? The hard truth: They could be real AirPods from stolen or diverted stock.
Canadian businessman Kevin O'Leary recently gave the example of a popular, heavy-duty floor mat for trucks. The U.S. idea was produced in China. O'Leary claims that as soon as sales reached 5 million units, a knock-off appeared in China, exactly the same in every detail, except at a fraction of the price, crushing the people in the U.S. who had the idea, invested in research and development, and got financing to produce the idea.
In the U.S., there is a price to pay in court for stealing ideas. But in other countries, businesses often lack effective recourse. O'Leary is strongly pro-tariffs for that reason. A high tariff could level the playing field. O'Leary recommends 400 percent.
Countries may use tariffs to pressure trading partners to enforce IP protections. For instance, the U.S. has imposed tariffs on Chinese goods partly due to concerns over IP theft. The United States Trade Representative estimates IP theft costs the U.S. economy $225, $600 billion annually.
