If you only look at surface-level headlines, the U.S.–China trade conflict seems like a straightforward battle over goods: steel, semiconductors, rare earths, solar panels. But dig a little deeper, and the real fight emerges—it’s about intellectual property. At the heart of the ongoing tariffs and tensions are deep grievances over unpaid royalties, trademark abuse, copyright violations, trade secret theft, and the systemic undercutting of American innovation.
The U.S. China trademark wars are a crucial lens for understanding why tariffs exist in the first place. And why, despite short-term economic pain, many legal experts and policymakers believe these measures are essential to leveling the global playing field for American businesses.
Intellectual Property: America’s Top Export—and China’s Unpaid Bill
Intellectual property is not just an abstract legal concept; it is one of America’s most valuable assets and export. A 2022 U.S. Patent and Trademark Office (USPTO) report, which is part of the Department of Commerce, found that in 2019, IP-intensive industries contributed $7.8 trillion to the U.S. GDP (or 41%) and accounted for 63 million jobs (direct and indirect). In raw export numbers, licensing of intellectual property—including trademarks, patents, copyrights, and trade secrets—generates over $130 billion per year in direct revenue.
The real long-term wealth of the U.S. economy flows from creativity, invention, and branding—not commodities.
Yet China, the world’s second-largest economy, systematically pays far less in IP royalties to U.S. companies than its economic peers. If China paid IP royalties at rates comparable to Europe or India, the U.S. could conservatively expect hundreds of billions of dollars more annually in licensing revenue.
The gap isn’t an accident. It’s a result of deliberate policies favoring domestic enterprises, weak enforcement of trademark rights, “localization” rules forcing IP transfers, and a legal system that too often favors infringers over innovators.
How Trademark Abuse Fuels the U.S. China Trademark Wars
Among the many forms of IP theft, trademark infringement is one of the most rampant—and costly. American brands ranging from Nike to Apple to emerging startups face endless cycles of counterfeit goods, bad-faith trademark registrations, cybersquatting, and unauthorized licensing schemes inside China.
For years, Chinese companies have exploited weaknesses in their own system, registering U.S. trademarks domestically before the rightful American owners can do so. This forces U.S. companies into expensive, time-consuming fights to cancel these bad registrations—often without guaranteed success. Meanwhile, counterfeit goods flood global markets, eroding brand value, confusing consumers, and costing legitimate businesses billions annually.
The U.S. China trademark wars aren’t just happening at customs offices. They are playing out in Chinese courts, before the U.S. Patent and Trademark Office, and across major ecommerce platforms where American companies must constantly defend their brands against fakes and unauthorized sellers.
At L.A. Tech and Media Law Firm, we regularly advise clients on these cross-border trademark disputes, offering strategies ranging from proactive international filings to enforcement actions through customs and major online marketplaces. (Learn more about our trademark enforcement strategies here.)
Tariffs as a Tool to Fight IP Theft
When the Trump administration imposed Section 301 tariffs beginning in 2018, the rationale cited wasn’t just trade deficits—it was intellectual property theft. U.S. investigations documented widespread infringement of American patents, copyrights, trademarks, and trade secrets by Chinese entities, often with government backing or blind eye. The tariffs were designed not just to punish these practices economically but to force a systemic change in how China respects (or fails to respect) U.S. IP rights.
The Biden administration has largely maintained these tariffs, even while negotiating on other trade fronts, precisely because the underlying IP issues remain unresolved. While some critics argue tariffs hurt U.S. consumers by raising prices, defenders note that allowing unchecked IP theft poses an even greater long-term threat to American innovation and competitiveness.
After all, if another country can freely copy, counterfeit, or clone the products of American ingenuity without paying licensing fees or facing consequences, what incentive remains for inventors, entrepreneurs, and brands to invest in new creations?
The True Cost of Unpaid Royalties
The True Cost of Unpaid RoyaltiesIf China paid fair-market IP royalties comparable to other major economies, estimates suggest the U.S. economy would capture an additional $400–500 billion per year—money that could fund R&D, support creative industries, and drive innovation.
These royalties wouldn’t just come from blockbuster tech products. They would come from thousands of American trademarks licensed for use abroad, from copyrighted works adapted into foreign markets, from patented technologies embedded in global supply chains, and from trade secrets that should be protected under international agreements.
Every startup with a brand to protect, every SaaS company building an AI model, every consumer brand entering Asia is impacted by these dynamics. As part of a smart intellectual property strategy, companies must think globally from the beginning—registering trademarks internationally, building licensing agreements that anticipate jurisdictional risks, and designing enforcement strategies that are scalable. (See how we help technology startups protect IP worldwide here.)
Why Intellectual Property Is the Foundation of Fair Trade
In the larger context, the U.S. China trademark wars are a microcosm of a much bigger fight over what global commerce looks like in the 21st century. Trade cannot be truly fair if intellectual property is systematically disrespected. Brands, inventions, and ideas are not free commodities to be copied without permission. They are the lifeblood of modern economies.
Until IP is respected and royalties are fairly paid, tariffs and trade disputes are not just inevitable—they are necessary. The fight isn’t about nationalism; it’s about defending the core economic engine that drives American prosperity.
David Nima Sharifi, Esq., founder of L.A. Tech and Media Law Firm, is one of the nation’s leading authorities on international trademark law, technology transactions, and cross-border brand protection. Featured in the Wall Street Journal and recognized among the Top 30 New Media and E-Commerce Attorneys by the Los Angeles Business Journal, David helps companies navigate the complex realities of global IP protection and licensing.
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