The China Trade Problem: How It’s Hurting Everyday Americans
The U.S.–China trade relationship has been imbalanced for decades, often to the detriment of American consumers, entrepreneurs, and investors. While American companies adhere to strict regulations and standards, many Chinese firms exploit legal loopholes, engage in intellectual property (IP) theft, and flood global markets with counterfeit or low-quality goods. This dynamic not only undermines U.S. businesses but also affects the quality and safety of products available to American consumers.
This isn’t just about tariffs or politics. It’s about the fact that American companies play fair while Chinese firms cheat the system, stealing innovation, blocking access to their markets, and raising money in ours with almost zero accountability.
1. Counterfeit Goods Flooding the Market
In China, counterfeit Linkin Park T-shirts, often with misspelled logos like “KNKIN PARK,” have become widespread. These shirts are typically produced through unauthorized additional production runs, known as “third-shift piracy,” where manufacturers produce extra units without the brand’s consent and sell them independently. Such practices not only infringe on intellectual property rights but also deprive artists and companies of rightful revenue.
Broader Impact
According to the Organization for Economic Co-operation and Development (OECD), counterfeit goods accounted for approximately 2.5% of global trade in 2019, with China being the primary source of these products. These counterfeit items range from clothing and electronics to pharmaceuticals, posing significant risks to consumer safety and brand integrity.
2. Intellectual Property Theft in the Automotive Industry
Example: General Motors vs. Chery Automobile
In 2003, General Motors (GM) accused Chinese automaker Chery of copying the design of its Daewoo Matiz for Chery’s QQ model. GM alleged that the QQ was a near-identical replica, sharing remarkably similar body structures and components. The lawsuit was eventually settled out of court, but the incident highlights the challenges U.S. companies face in protecting their intellectual property in China.
3. Lack of Regulatory Oversight on Chinese E-Commerce Platforms
Example: Alibaba’s Taobao Platform
Alibaba’s Taobao, one of China’s largest e-commerce platforms, has been criticized for hosting a vast number of counterfeit goods. Despite efforts to crack down on counterfeit listings, the platform has struggled to effectively police its marketplace, leading to the proliferation of fake products ranging from luxury goods to everyday items.
4. Impact on American Investors
Example: Luckin Coffee Scandal
Luckin Coffee, once hailed as China’s answer to Starbucks, raised $1.5 billion from U.S. investors and was listed on NASDAQ. In 2020, it was revealed that the company had fabricated over $300 million in sales, leading to a significant stock price collapse and eventual delisting. U.S. investors suffered substantial losses, and due to jurisdictional challenges, had limited legal recourse.
SEC Press Release on Luckin Coffee Fraud
Example: Your TikTok Feed? A One-Way Street
American apps like Instagram, YouTube, and Facebook are banned in China. But China-based TikTok dominates U.S. screens, especially Gen Z’s, while collecting data, influencing culture, and driving billions in revenue.
China gets access to U.S. users, money, and influence. U.S. companies get the door slammed shut.
5. Your Investments? You’re Funding the Problem
You might not realize it, but your retirement account or index fund likely includes Chinese stocks like Alibaba, Pinduoduo, or JD.com. Many of these companies aren’t held to the same audit standards as American companies, and yet they’re raising billions on U.S. exchanges.
If something goes wrong, fraud, delisting, fake earnings, you have no legal recourse. Your money is just gone.
Proposed Solutions
To address these challenges and level the playing field, the following measures are what I’d recommend:
No Audit = No Access
Strict Enforcement of Audit Compliance: Mandate that all foreign companies listed on U.S. stock exchanges adhere to U.S. auditing standards, with non-compliant firms facing delisting.
If a company doesn’t let U.S. regulators audit its financials, it should be kicked off U.S. exchanges. Period. That would’ve stopped the Luckin Coffee disaster before it started.
Reciprocal Market Access: Implement policies ensuring that if American companies face restrictions in China, Chinese companies should face equivalent restrictions in the U.S.
If Instagram’s banned in China, TikTok should face restrictions in the U.S. until access is mutual.
Protect American Ideas: Create an IP Protection Fund, financed by tariffs and penalties from foreign violators, to support small businesses whose products are copied overseas.
Require Legal Accountability: If a foreign company raises money in the U.S., it must agree to be sued in U.S. courts. No more vanishing acts when things go south.
Invest in Ourselves: Use federal funds to support key American industries, EVs, semiconductors, AI, so U.S. workers and companies can compete fairly. China does this every day through state-backed capital.
This Isn’t About Politics. It’s About Common Sense.
The rules should apply to everyone. When Chinese companies get away with cheating the system, it doesn’t only hurt big corporations, it hits everyday people. Your job. Your data. Your investments. Your future.
America has the leverage. We just need to use it.