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Proposed US Tech Rules Could Make Teslas, Smartphones More Expensive

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Proposed US Tech Rules Could Make Teslas, Smartphones More Expensive
The Trump administration is expected to roll out new rules intended to protect U.S. intellectual property. But those rules come at a cost.
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President Donald Trump has been adamant about protecting the U.S.' intellectual property from other countries as a matter of national economic security. IP theft, as it's called, could cause up to $600 billion in annual losses for the U.S., according to one estimate. Now, Trump's team is gearing up to unveil its plan to stop that pipeline.

The proposal, scheduled for release this week, is intended to dissuade international companies from importing or investing in U.S. tech. One measure would prohibit firms with at least 25 percent foreign ownership from buying U.S. companies that work with "industrially significant technology" like electric vehicles or robots. Other rules would bar U.S. companies from shipping that tech to our competitors, like China.

The new rules would grant a bit of security for IP created in the U.S. But they may not help companies that outsource manufacturing of phones and other devices to countries like China. In fact, they could make those products more expensive stateside.

That's because the proposed rules could force manufacturers to pay more for electronic parts. Capacitors, for example, are essential to building everything from Teslas to iPhones — but they're expected to become drastically more expensive under the proposed trade rules. It's likely those costs will be passed on to the consumer.

Major American tech companies are already lobbying for exemptions to help keep prices low. Apple CEO Tim Cook reportedly met with President Trump to ask him to not put tariffs on iPhones because the company assembles most of them in China, where the new rules would apply. Trump reportedly granted Cook that exemption.

But most companies don't have Apple's political clout, and smaller companies may take the brunt of the new rules' impact.

And these rules may not stop many IP leaks anyway. China, one of the biggest players in IP theft, has already cut back on new investments in U.S. companies by more than 90 percent since last year.