Why The U.S. May Confront Non-Tariff Attacks Against Tech Firms
I recently explained in Forbes that Trump trade negotiators could leverage the planned
withdrawal of anticompetitive federal regulations to obtain a cutback in foreign anticompetitive market distortions (ACMDs) that harm American firms and consumers.
A July 2 nonpartisan letter to senior Administration officials from the Information Technology and Innovation Foundation (ITIF), joined by senior policy scholars, strikes a similar theme in calling on the Administration to target foreign governments' non-tariff attacks (NTAs) on America's leading technology companies. The letter recommends a 3-pronged negotiating strategy to counteract NTAs. Administration adoption of that strategy could bestow substantial benefits on U.S. producers, workers, and consumers.
The NTA Problem
As the letter explains, a new form of trade restriction is emerging that existing legal frameworks fail to address: non-tariff attacks (NTAs). NTAs are a specific type of ACMD that is growing in significance.
Unlike traditional tariffs or known non-tariff barriers (NTBs), NTAs are disguised as legitimate domestic policies. Their true purpose is to target leading U.S. technology firms, undermine innovation, extract financial and intellectual assets, and weaken America's strategic position in the global tech race.
Three features distinguish NTAs from traditional NTBs:
As the U.S. seeks to rebalance trade relations, rolling back these unfair practices should be a top priority in negotiations. The ITIF has documented over 100 cases where U.S. trading partners have adopted policies aimed at limiting American tech firms' operations or siphoning their revenues.
The European Union led this effort with its Digital Markets Act (DMA) and Digital Services Act (DSA), which targeted major U.S. firms while largely sparing local competitors. In 2024 alone, regulatory fines on American companies in the EU totaled nearly $6.7 billion. Other countries are following suit: Brazil with similar regulations, India targeting U.S. firms under its data protection law, and Japan restricting dominant U.S. smartphone platforms.
Although often framed as consumer protection, privacy, or digital sovereignty, these policies impose selective burdens that disadvantage American firms and empower foreign rivals. They also often harm the enacting countries themselves by disrupting ecosystems that support small and medium-sized businesses dependent on global platforms.
These attacks also pose national security risks. U.S. tech firms are vital to innovation and defense sector competitiveness. By diverting investment from R&D, mandating tech transfers, or exposing sensitive capabilities, NTAs erode the strength needed to compete with China's state-led technology push.
The consequences are severe:
This problem is most pressing in the U.S.-China context. While America applies overt targeted measures like export controls, other nations exploit NTAs to undermine U.S. firms more subtly and effectively. These tactics distort markets far more powerfully than tariffs and shift global leadership toward China just as the U.S. needs unity and strength.
Policy Recommendations
Addressing NTAs is essential for preserving U.S. technological strength, protecting national interests, and maintaining U.S. leadership in the global digital economy. Current trade negotiations present a golden opportunity to confront the growing NTA threat and reinforce the foundations of American innovation and security.
Keep in mind that NTAs do more than just harm American industry and national security – by harming our high tech companies, they present broad threats to overall American welfare.
High tech firms are hugely beneficial to the American consumer. They provide high-quality, low-cost services to Americans (think Google or YouTube), are a huge sector in our economy, create jobs and wealth for Americans at large, and drive innovation that improves lives and the American consumer experience.
In sum, countering NTAs is key to maintaining a dynamic, innovative U.S. economy.
Appropriately, the ITIF letter highlights 3 vital criteria for confronting the NTA problem:
1. Make NTAs a top agenda item in all trade negotiations.
2. Secure binding agreements to block discriminatory digital regulations.
3. Set up systems to detect and respond to emerging NTAs.
The Trump administration may wish to consider making these suggestions key features of its trade negotiating strategy. Success in rooting out NTAs would be a 'win-win-win' for American firms, workers, and consumers.
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In the first quarter of 2014, Motorola sold 900,000 Moto X handsets worldwide compared to Apple selling 26 million of its new iPhone 5s during the same period, according to Strategy Analytics. Five months after Moto X debuted, Motorola slashed its price to $399. After nine months, the factory was down to 700 workers, or less than one-fifth of what it had earlier. Within the first few weeks, Randall said it was clear to leadership that the Moto X was underperforming. The team had to ramp down production. While not a complete failure in terms of sales, the phone wasn't a huge success either. Employees said they expected future models to do better, after improving the phone's design. Many blamed a limited marketing budget compared to the big money that Samsung and Apple spent on print ads and TV commercials. Because Moto X was a brand new model, they argued it needed a splashier ad campaign to get the word out or a more convincing message. One of the company's big assumptions about the phone had turned out to be wrong. After betting big on U.S. assembly, and waving the red, white, and blue in its marketing, the company realized that most consumers didn't care where the phone was made. 'One of the learnings was that assembled in America wasn't resonating,' said Mark Rose, a senior director of product management with Motorola at the time who now coaches product managers as a consultant. Apple wouldn't necessarily face the same challenges as Motorola, if it opened a U.S. smartphone plant. Their vast difference in size could make a big difference. Because of sluggish demand, Motorola struggled to achieve the cost savings from making Moto X in huge numbers. Apple, on the other hand, with annual U.S. iPhone sales in the tens of millions, could more easily cash in on the economies of scale. For Motorola, the challenge it faced was compounded by its decision to let shoppers customize their phones when ordering them online. Fully assembling those devices ahead of time, which would have helped make the plant run more smoothly, was impossible. It also led to higher return rates, an expensive problem for any company, because customers were more likely to be disappointed with the color scheme they chose. Apple, with its standardized lineup, doesn't have the same worries. Thanks to its successful track record, Apple also has significant control and leverage over its suppliers to negotiate lower prices for its iPhone components. Motorola, with its back-in-the-pack position and the uncertainty about whether its new Moto X phone would be a hit, had little sway in comparison. Meanwhile, Motorola, along with most other Android phone makers, operate in an environment of intense competition that translates into low profit margins. Any extra costs, such as is the case with U.S. manufacturing from higher wages, can be financially painful. Apple's iPhone, however, is a premium product that sells at a high margin. As a result, the company could more easily absorb the additional expense of producing it in the U.S. Ultimately, Google's changing priorities played a major role in its decision in January 2014 to sell Motorola to China-based Lenovo for $2.9 billion. A few months later, with the sale of the phone maker still pending, Google announced it would shut down its Moto X assembly line in Fort Worth and shift production entirely to China and Brazil, where production costs were lower. Instead of trying to compete with Apple, Motorola, under Lenovo, would focus on making cheaper phones aimed at customers in developing countries. 'What we found was that the North American market was exceptionally tough,' Motorola president Rick Osterloh told the Wall Street Journal after announcing that the Fort Worth plant would close. Selling would eliminate another problem for Google: Griping by phone makers that used Android software in their devices. They complained that Google, after buying Motorola, competed directly against them. Google had to take the rebellion seriously. If those partners bailed on Android, it would be a huge blow to Google because it would make it more difficult for handset users to access its services. Another factor in the sale was Google's rationale for acquiring Motorola in the first place. In addition to buying a phone business, Google had gotten Motorola's huge patent portfolio that it hoped would help it fend off a growing number of lawsuits over Android. Apple, Microsoft, and other competitors had targeted Google and its phone making partners with claims that the operating system infringed on their intellectual property. In selling Motorola to Lenovo, Google kept most of the patents, tacitly acknowledging that they were more valuable to it than a handset business with disappointing sales. In the end, Motorola's failed U.S. adventure had little to do with where the Moto X was assembled, by all accounts. The phone simply didn't sell well enough to justify a U.S. assembly line. 'If it had sold better off the jump, the whole story would have been different,' said Gabe Madway, who worked in Motorola's public relations at the time and is now at online investment management service Wealthsimple. Randall, meanwhile, put it even more bluntly, saying the phone's failure 'had very much zero' to do with U.S. manufacturing and everything to do with the iPhone being a better device with bigger brand recognition than the Moto X. Of course, a lot has changed in 12 years that could make or break a new U.S. manufacturing push by a company like Apple. Factory automation, for example, has greatly improved, opening the door to more cost savings in any U.S. smartphone factory now compared to before. But some things haven't changed. Adding thousands of workers on short notice to speed up production of a device getting more sales than anticipated would be next to impossible to do in the U.S. In China, it's routine. 'If there was a ramp that went super well, the ability to flex that workforce is insane' Randall said about China. 'The ability to scale down that work workforce is insane.' Also, there are relatively few U.S.-based suppliers that could produce enough electronic components for millions of phones. And expanding the pool would likely take years. Meanwhile, importing parts, the obvious alternative, may be prohibitively expensive if Trump's 'Liberation Day' tariffs, proposed in April, fully kick in. It doesn't help that the president frequently changes his mind about the levies, making it difficult for companies to plan ahead for big investments like phone assembly plants. Mills, the former Motorola CIO, said Trump giving phone makers like Apple some wiggle room would make it easier for them to set up U.S. manufacturing. Instead of producing their phones entirely in the U.S, they could avoid tariffs by doing merely final assembly domestically, like Motorola tried. 'A big thing comes down to what Trump means by Made in America,' said Mills. Another idea is for Apple to set up a small operation domestically to produce a 'prestige or limited edition' iPhone, said Ross Rubin, an analyst with Reticle Research. It could charge a premium for the device, say $2,000, he said, and let Trump declare victory, letting Apple avoid the much more expensive alternative to onshoring a huge chunk of its iPhone production. What is clear is this: Motorola's Made in America experiment lasted just over a year, and in more than a decade since, no other major smartphone maker has dared to try something similar again. This story was originally featured on
