The United States’ recent repudiation of its commitments under the Information Technology Agreement (ITA) has sparked deep concerns over its technological competitiveness and global strategic standing. Cathy Fang, a policy analyst at DSET, recently contributed an article to The Diplomat, offering an in-depth analysis of the economic and strategic impacts brought by the U.S. abandonment of ITA principles. She pointed out that such a move may undermine the cross-border collaborative ecosystem upon which global technological innovation depends, thereby weakening the technological edge the U.S. has built over many years.
On April 2, former President Trump announced a new tariff policy, which in effect discards U.S. adherence to the multilateral framework of the ITA. Although U.S. Customs and Border Protection (CBP) announced on April 11 that a number of ICT products—such as smartphones, personal computers, servers, and semiconductors—would be granted tariff exemptions, the coverage is limited to only 20 items, far below the 201 product categories listed under the ITA. In addition, the U.S. has also announced a national security trade investigation into semiconductors, further intensifying market uncertainty.
Fang noted that since its entry into force in 1996, the ITA has covered a wide range of ICT products, from semiconductors and computers to advanced medical equipment and GPS systems. According to a World Trade Organization (WTO) report, between 1996 and 2016, the average import prices of ICT products among ITA member countries dropped by 66%; in contrast, non-participating countries continued to face tariff burdens ranging from 45% to 87%.
In short, the ITA’s zero-tariff mechanism has not only promoted technological innovation and R&D but also lowered the threshold for access to ICT products, bringing significant benefits in narrowing the digital divide and promoting economic growth.
However, Fang also emphasized that Trump’s policy of reciprocal tariffs—setting a base rate of 10% and imposing high tariffs of 30% to 45% on products from East and Southeast Asian manufacturing hubs—clearly departs from the spirit of multilateralism advocated by the ITA. This move not only undermines the economic advantages the U.S. has long relied on through free trade, but may ultimately result in hundreds of billions of dollars in economic efficiency losses, while weakening the capacity for industrial R&D and technological innovation.
Furthermore, the White House announced a new regulation on April 4, stipulating that if U.S. content in ICT products exceeds 20%, tariffs would only apply to the foreign content. Although the policy intends to raise the share of domestic production, the vague method for calculating component content, along with unclear customs rules and lengthy review processes, has left businesses confused in practice, making the overall policy highly uncertain.
Fang further pointed out that the current U.S. tariff policy seeks to strike a balance between revitalizing domestic manufacturing and increasing government revenue, but in reality, it obstructs the normal operations of high-tech industries. In the short term, companies are forced to absorb the pressure from rising costs; in the long term, it may reduce investment in key areas such as GPUs and AI infrastructure, further eroding U.S. technological competitiveness. In contrast, China is actively strengthening its manufacturing and R&D capacity through massive state funding. Its ICT market is projected to grow at an annual rate of 10% from 2024 to 2032, reaching a total value of $1.4 trillion, demonstrating strong industrial expansion momentum.
Fang concluded by pointing out that although the original intention of the tariff policy is to revive domestic manufacturing, it is in fact dismantling the global cooperative ecosystem upon which technological innovation depends. The U.S. should carefully weigh the long-term pros and cons between protectionism and free trade, to avoid falling into the trap of self-isolation and handing over global technological leadership to emerging powers.