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Trump, You’ve Got It All Wrong on Tariffs

This article was originally published on ETFTrends.com.

By John Mauldin via Iris.xyz

I’m going to start with a story.

There is a drug produced in China that works well on strokes and numerous other less devastating medical issues.

It is derived from pig pancreases or human urine. It isn’t approved in the US due to justifiable regulatory issues, but it is used in Europe as well as China.

A small biotechnological firm in the US has the technology to synthesize this drug without using pancreases or urine. This would be safer and cheaper. 

The Chinese company agreed to pay the US company $4.5 million upon the meeting of certain guidelines and then to purchase the drug from the company at a fraction of its Chinese production cost. 

The US company spent a great deal of money and met its guidelines, providing the Chinese company with everything required under the contract. The Chinese company then said, basically, “We need to see the actual process and cell lines in order to verify the process.”

That means, in essence, “Give us your intellectual property.” With that knowledge, the Chinese company would no longer have needed the US company.

When the US company had to tell shareholders that the deal fell through because it (correctly) told the Chinese company to go pound sand, its stock value plummeted.

The Chinese company knew that would happen and had bet the Americans would fold. In this case, they didn’t.

This is just a small part of the cost of Chinese intellectual property theft.

Read the full article at Iris.xyz.

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