Business and Economic Review In my opinion, the assertions about TikTok and some other tech companies cannot be fully reliabl

Business and Economic Review

Name:

Institution:

Date:

Business and Economic Review

In my opinion, the assertions about TikTok and some other tech companies cannot be fully reliable. Of course, tech companies can pose a severe threat to national security; however, the plan is primarily orchestrated to economically sabotage Chinese technological innovations to allow money leakages back into the United States (“Trump Effort to Keep U.S. Tech Out of China Alarms American Firms”, 2020). Some crucial personal information is left on the internet servers, and some criminals might steal this data and use it to conduct criminal activities. The government has every right to protect its citizens and organization concerning the matters of national security. Some privacy that can be invaded includes personal emails, photos, work information, and cell phone contacts, as they are left exposed on the internet and can be used for fraudulent activities.

I do not think that banning the technology if the parent company refuses to sell the operations to US firms will resolve anything. I believe foreign companies should be given fair opportunities and treated similarly to how the United States corporations operating abroad, provided they comply with the rule of law. The parent company is well equipped to managing whatever technology it has invented as opposed to force-selling in the US firms. Perhaps, they might be forced to sell it, and since they are the one who created it ends up compromising the same data, the United States government are trying so hard to protect. TikTok has done quite a lot proving how more transparent their operations and practices are while playing so hard to disregard any association with Beijing, where sweeping national security law enacted by the Chinese government was made effective most recently (“Trump Effort to Keep U.S. Tech Out of China Alarms American Firms”, 2020). TikTok global head of security vowed that the app is committed to maintaining robust security practices. It has always practiced that, even allowing outside firms to conduct audits on its technology.

There are two main methods for strictly regulating services importation, namely, through quota systems and tariffs. Through a quota system, the United States government can limit the number of foreigners or rather the minority groups entering the US every year while also limiting their numbers in business firms as per the policy document. When the United States imposes a quota to those Chinese tech firms, it will restrict their trade operations, limiting the monetary value of product services that the United States is importing while allowing such firms to operate in our country. In other words, quotas work to boost domestic production at the foreign output expense by restricting foreign competition (Rodrik, 2018). As it is commonly known, foreign corporations are subject to paying a massive amount of taxes. If the United States decides to ban the TikTok company, it will be losing some enormous sums of revenue needed for the economic gains of our country. Similarly, a relatively high number of jobs will be lost in banning TikTok.

Tariffs significantly hamper the economic growth in a given country as it raises prices and reduces services available to the consumers (Rodrik, 2018). TikTok can be forced to pay a massive amount of taxes to operate in the United States, making their operations difficult and even cutting down their revenues. On economic terms, imposing tariffs and strict trade policies lead to a substantial drag in the country’s economy (Rodrik, 2018). Taxes impose costs that extend beyond the direct price of a dollar increases on targeted goods and services. When it comes to US services, the introduction of tariffs might translate to domestic producers’ financial gains since their production is made relatively more competitive than imports. It also leaves the citizens who cannot afford local services more vulnerable to economic disadvantages as import services are relatively lower.

By selling TikTok, it means that the United States government is trying hard to prevent Chinese tech firms from dominating in advance technologies to protect American tech companies. If the parent company for TikTok eventually sells it to American firms, all the money will now be in the United States’ hands, and there will be no money leakages. TikTok may be a revenue source to the United States, but more money is plowed back to China. Through selling will significantly boost the American economy. However, if they decide not to sell but rather be banned in the US, the United States will be losing revenue. In my opinion, it not worth gambling to restrict this trade since it is already a source of income for our government. The government should not only think of short-term goals but even plans. Perhaps, if restriction happens, some foreign investors might be scared to invest in the United States.

As the presidential advisor, I would advise the president to force the parent company for TikTok to sell the technology to American firms because this technology company is currently performing well in terms of profitability than several Silicon Valley tech companies . In 2019, TikTok pulled close to $3.6 billion in profits, based on Bloomberg reports. These figures are far much better than companies like Twitter, who recorded a profit of $1.5 billion or even Snapchat that are currently undergoing losses. The business will serve to protect domestic industries from remaining in a competitive technological edge as China continues.

References

Rodrik, D. (2018). What do trade agreements really do?. Journal of economic perspectives, 32(2), 73-90.

Trump Effort to Keep U.S. Tech Out of China Alarms American Firms. Nytimes.com. (2020). Retrieved 7 October 2020, from https://www.nytimes.com/2020/02/16/business/economy/us-china-technology.html.