News of a deal with China to phase out trade tariffs send markets soaring last week. Rising markets are good for investors at large and especially good for the technology sector, which is now inextricably linked with the broader economy.
I’ve been writing and speaking for years about the impact of digital transformation on business. Today, we live in a world where business and technology are inseparable. Frankly, I cannot imagine a future scenario in which there isn’t a strong bond between business and tech.
As technology leaders and executive, however, it’s absolutely crucial for us to keep a sharp eye on the details as they unfold. As Yogi Berra famously said, “It ain’t over until it’s over.”
Even if a trade deal emerges, there will still be plenty of unanswered questions. From my perspective, it seems unlikely that the outstanding issue of IP theft will be resolved in the near term. That’s a problem, and it raises a host of related questions, many of which touch on issues of national security.
For example, CBS News reported last week that New York-based company was charged with selling Chinese-made security equipment to the U.S. agencies.
“According to the criminal complaint, since 2006, Aventura Technologies operated a scheme where over 1,000 shipments of network security software and hardware from China were relabeled as American and then sold to the federal government. That includes surveillance systems bought by the U.S. Army, Air Force, Department of Energy and other U.S. agencies,” writes Mola Lenghi of CBS News. “The company allegedly made nearly $90 million. U.S. Attorney Richard Donoghue called the fraud scheme a national security threat.”
Moreover, the idea of a short-term agreement with China apparently isn’t welcome in every part of the White House. “There is a divide within the administration over whether rolling back tariffs will give away U.S. leverage in the negotiations, current and former administration officials said,” according to an article by Heather Timmons and Jeff Mason of Reuters.
Even commentator Jim Cramer is wary about the advisability of a short-term deal with China. He’s quoted in a CNBC article as being “a tad suspicious about all of this trade truce happy talk.”
I believe we’re still in the opening innings of a long game. A short-term agreement might feel good, but I’m concerned about the long-term impact of losing our leverage. As Europe slides into a recession, the U.S. economy remains vibrant. Let’s use our economic strength to get the best possible long-term deal.