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Practice Notes

US Executive Order on IP Violations and Trade Tariffs

The executive order of 2 April 2025 sparked interesting debates and discussions in the national and international media. Most of these debates focus on the announced aim for the executive order which is addressing the current account deficit. The discussions however overlooked the punitive aspect related to infringing the Intellectual Property rights owned by the US.

Table of contents

Historical Use of Tariffs as Punitive Trade Measures:

Interestingly, despite widespread global unrest and shock in relation to this new order, it is not the first time that the White House has used tariff related measures under such circumstances. Punitive use of the tariff can be traced to as far back as 1828, when the US Congress passed what became known as the ‘abomination tariff’. As implied by its name, its unprecedented high rates, in an attempt to rectify trade imbalances, received heavy criticism, which led to their nullification just 4 years later. It exemplified an early executive use of the tariff as a solution to restore the commercial balance sheet in favor of domestic trade, but in this case ultimately led to its nullification just 5 years later. Trump’s recent tariff, passed with a similar intent of rectifying the trade imbalance, can now be analyzed in a 21st century framework, where intellectual property rights have a significant part to play on the international playing field.

Intellectual Property Deficiencies as Non-Tariff Barriers

With reference to the recent declaration, it is extrapolated from the text of the executive order issued by Donald Trump on 2 April, 2025 that it indeed addresses “inadequate patent, copyright, trade secret, and trademark regimes and inadequate enforcement of intellectual property rights” as non-tariff barriers. While the term “punitive measures” in direct connection with intellectual property might not be explicitly detailed in text of the executive order, the Order’s central mechanism of “reciprocal tariffs” designed to “rectify trade practices” (which include those related to inadequate IP protection), can be analyzed for its implicitly punitive aspect concerning enforcement of US Intellectual Property.

Why It’s Important for IP Law:

This is a key question because it examines the growing trend of using trade measures to enforce IP protection goals. This could affect how international IP agreements, such as the TRIPS Agreement (which sets global Intellectual Property rules) are applied. In relation to this, on 4 March 2025 the US indefinitely paused financial contribution to WTO.

It’s also vital for understanding how trade law and IP law interact when one country uses trade actions based on its assessment of another country’s IP system.

Looking at the penalty aspect is crucial for seeing how such actions might influence global IP standards, the creation of new inventions, and access to international markets for IP-intensive goods and services.

Identification and Legal Interpretation of IP-Related Provisions

Close Reading of the Executive Order:

The executive order referencing intellectual property, includes terms like “inadequate patent, copyright, trade secret, and trademark regimes,” and “inadequate enforcement of intellectual property rights.

Comprehensive Overview of Non-Tariff Barriers in the Executive Order:

The transcript of the executive order states that: “Similarly, non-tariff barriers also deprive U.S. manufacturers of reciprocal access to markets around the world.  The 2025 National Trade Estimate Report on Foreign Trade Barriers (NTE) details a great number of non-tariff barriers to U.S. exports around the world on a trading-partner by trading-partner basis.  These barriers include import barriers and licensing restrictions; customs barriers and shortcomings in trade facilitation; technical barriers to trade (e.g., unnecessarily trade restrictive standards, conformity assessment procedures, or technical regulations); sanitary and phytosanitary measures that unnecessarily restrict trade without furthering safety objectives; inadequate patent, copyright, trade secret, and trademark regimes and inadequate enforcement of intellectual property rights; discriminatory licensing requirements or regulatory standards; barriers to cross-border data flows and discriminatory practices affecting trade in digital products; investment barriers; subsidies; anticompetitive practices; discrimination in favor of domestic state-owned enterprises, and failures by governments in protecting labor and environment standards; bribery; and corruption.”

Framing IP Deficiencies as IPR International Dispute Resolution and Trade Asymmetries Affecting U.S. Manufacturing:

The executive order framed inadequate intellectual property protections as a form of asymmetries in trade relationships actively weaken domestic production capacity, particularly within the U.S. manufacturing . These same imbalances also negatively impact U.S. producers’ ability to export, which consequently reduces their incentive to produce. Such lopsided trade dynamics are thus a direct cause of and contribute significantly to the development of trade deficits. The executive order states that:

“These asymmetries also impact U.S. producers’ ability to export and, consequentially, their incentive to produce. Specifically, such asymmetry includes not only non-reciprocal differences in tariff rates among foreign trading partners, but also extensive use of non-tariff barriers by foreign trading partners, which reduce the competitiveness of U.S. exports while artificially enhancing the competitiveness of their own goods.  These non-tariff barriers include technical barriers to trade; non-scientific sanitary and phytosanitary rules; inadequate intellectual property protections; suppressed domestic consumption (e.g., wage suppression); weak labor, environmental, and other regulatory standards and protections; and corruption.  These non-tariff barriers give rise to significant imbalances even when the United States and a trading partner have comparable tariff rates.”

Trade Deficits and Non-Tariff Barriers from IP Inadequacies:

Inadequate intellectual property protections, inadequate patent, copyright, trade secret, and trademark regimes and inadequate enforcement of intellectual property rights; discriminatory licensing requirements or regulatory standards are framed by the executive order as “non-tariff barriers” or practices contributing to trade deficits targeted by the Order.

Executive Order’s Classification of IP Shortcomings as Trade Barriers:

The Executive Order frames inadequate intellectual property (IP) protection in trade partner countries as a significant non-tariff barrier that directly contributes to U.S. trade deficits by fostering unfair competition and distorting trade flows. This framing asserts that when trading partners have lax IP regimes or fail to enforce IP rights, their domestic companies can illicitly exploit U.S. IP rights, such as patents, copyrights, trade secrets, and trademarks, trade names—thereby avoiding substantial research and development costs or avoiding licensing royalties.  These practices constitute infringement against US IP rights, allowing the domestic infringers in the trade partner companies to utilise US IP rights as free ride on the expense of US IP holders.  This effectively creates an unfair competitive advantage, allowing these infringing entities to produce and export goods more cheaply. Such weak IP protection acts as a non-tariff barrier by undermining the competitiveness of U.S. businesses that have invested heavily in innovation, restricting their market access due to fears of infringement, and ultimately devaluing U.S. intellectual assets. The Executive Order then links these IP-related non-tariff barriers to the trade deficit by arguing that they suppress U.S. exports (as companies become wary of selling in infringing markets), increase U.S. imports of unfairly priced or counterfeit goods, hence resulting in lost licensing revenue and royalties for U.S. IP holders. Consequently, the Order positions these IP deficiencies not just as isolated infractions but as systemic trade practices that contribute to the targeted trade imbalances, thereby justifying the consideration of measures like reciprocal tariffs to rectify these conditions.

The authority to impose “reciprocal tariffs” under the Executive Order can be directly linked to identified IP deficiencies in trading partners because the Order is designed to rectify “trade practices” contributing to trade deficits, and it frames inadequate IP protection as a non-tariff barrier—a type of trade practice. By defining these IP deficiencies as harmful trade practices that contribute to the U.S. trade deficit through mechanisms like unfair competition, suppressed exports, and increased infringing imports, the Order establishes a direct causal pathway. Consequently, if a trading partner’s IP regime is deemed deficient and thus a contributor to the trade deficit as per the Order’s criteria, the “reciprocal tariffs” can be applied as a direct response aimed at rectifying those specific IP-related issues.

Section 301 of the Trade Act of 1974 explicitly justifies trade sanctions as a response to unreasonable acts that may burden U.S. commerce. Trump’s administration in particular, has cited this law several times, as seen in the recent Executive Order, to target such foreign trade practices. A 2017 investigation conducted by the Secretary Trade under his administration, confirmed harmful IP-related trade barriers, with an emphasis on China, placed at the top of its priority watch list. This would explain the particularly high rates aimed at China in the President’s recent policy, and begs the question as to whether such measures are appropriate to tackle severe infringements on US Intellectual Property.

Special 301 Report: Evaluating Foreign IP Enforcement in 2025:

In this context, on 29 April 2025, the Office of the United States Trade Representative (USTR) released its 2025 Special 301 Report on the adequacy and effectiveness of U.S. trading partners’ protection and enforcement of intellectual property (IP) rights.

Unilateral U.S. Determination of “Inadequate” IP Protections:

The provided Executive Order clearly states that “inadequate intellectual property protections” in other countries are a type of unfair trade practice (a non-tariff barrier) that harms the U.S. However, the Order doesn’t give a specific checklist or detailed definition of what makes IP protection “inadequate.” Instead, the meaning is implied: the U.S. government itself will likely decide if another country’s IP protection is insufficient based on its own laws, standards, and what it believes is needed to protect American businesses and national security. While international rules like the TRIPS Agreement might be a starting point for these judgments, the Order suggests the U.S. will look for stronger protections than just those minimums, ultimately basing its view of “inadequate” on whether U.S. interests are being properly safeguarded, especially regarding the actual enforcement of IP rights.

Divergence from Global IP Norms: U.S. Push for TRIPS-Plus Standards:

The Executive Order very clearly sets the stage for the United States to unilaterally decide what it considers “inadequate intellectual property protection” in other countries, without needing their agreement or that of international bodies. This U.S.-only interpretation is highly likely to differ from the global consensus on IP rules, such as those in the TRIPS Agreement. Specifically, the U.S. would probably demand stronger IP protections than current international minimums require (so-called “TRIPS-plus” standards), might object to other countries using internationally permitted flexibilities in IP law if it harms U.S. interests, and would generally prioritize American economic benefits over the more balanced approach favored by multilateral IP systems. This go-it-alone approach essentially bypasses established international cooperation and dispute settlement processes for IP issues.

By: Emma Sainsbury, and Mostafa Ahmed.

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