In an era of increasing economic nationalism and escalating tensions between the United States and China, intellectual property has emerged as a central battlefield. With Washington imposing tariffs on all Chinese imports into the U.S. and Beijing responding in kind, the fight over trade is not merely about goods crossing borders – it is about control over the intangible assets that drive modern economies: patents, trademarks, copyrights, and trade secrets (collectively, “IP”). As trade tensions continue, U.S. brands, technology firms, and creative industries face a shifting landscape where the risks of IP infringement, retaliation, and regulatory entanglements are higher than ever. What does this mean for businesses operating in both markets?
Mounting trade tensions come against a background in which China has been criticized for its lax enforcement of intellectual property rights, with allegations of widespread counterfeiting, forced technology transfers, and cyber-enabled theft. The U.S. Trade Representative’s Office has routinely listed China in its Special 301 Report, an annual review of global IP protection, citing “structural barriers to enforcement” and an “absence of effective deterrence for IP theft.”
Fashion and luxury brands, in particular, have been some of the hardest-hit industries, with China serving as the world’s largest source of counterfeit goods. According to a 2023 report by the Organization for Economic Cooperation and Development, China and Hong Kong are the source of roughly 80 percent of the world’s counterfeit goods.
Trade War Escalation & the Impact on Brands
A full-blown trade war may further complicate IP enforcement. While Beijing has, in recent years, taken steps to bolster its IP framework – including by introducing stricter trademark laws, increasing penalties for infringement, and establishing specialized IP courts – such commitments could wane if trade relations sour. For instance, potential consequences include …
> Weakened IP Protections: China could ease enforcement efforts, allowing counterfeiting networks and knockoff industries to flourish as a form of economic retaliation;
> Increased Barriers to Enforcement: U.S. companies seeking legal recourse in China’s courts may face heightened scrutiny or bureaucratic roadblocks; and
> Cyber Espionage Risks: With restrictions on trade, China may resort to more aggressive cyber tactics to gain access to valuable IP, particularly in technology, fashion innovation, and entertainment.
For the fashion, beauty, and luxury sectors, industries deeply dependent on brand identity and IP protection, the effects could be profound. Among other things, there may be a more robust stream of counterfeits flooding the market. With China still serving as the global epicenter for counterfeits, a trade war may weaken cooperation between U.S. enforcement agencies and Chinese authorities. Brands that rely on partnerships with Chinese manufacturers to crack down on fake goods could find enforcement efforts stalled.
There could also be supply chain disruptions that have an effect on IP rights. After all, many American brands lean on Chinese manufacturers for everything from textiles to high-tech materials. With tariffs driving up costs, brands may seek alternative markets, potentially leading to greater exposure to unregulated or less secure IP environments.
Still yet, there could be retaliatory IP seizures. China has been known to use regulatory measures to retaliate against foreign companies. In previous trade disputes, Beijing has threatened to invalidate foreign trademarks or patents as a countermeasure. If tensions escalate, U.S. companies could see their IP rights challenged or revoked under nationalistic policies.
How Companies Can Protect Themselves
In the face of these risks, U.S. businesses across industries are encouraged take an increasingly proactive approach to IP protection. This means continuing to register trademarks and patents in China early. Even amid trade tensions, securing formal protections in China remains critical. “First-to-file” trademark laws in China mean that bad actors can register well-known foreign trademarks before the rightful owner. Investing in digital protections may be more important than ever. Given the risk of cyberattacks, brands should prioritize cybersecurity and encryption measures to safeguard proprietary designs and trade secrets.
And finally, companies should consider diversifying their manufacturing. While moving production away from China may be costly (and easier said than done), brands should consider diversifying their supply chains to reduce reliance on any single jurisdiction.
THE BOTTOM LINE: The U.S.-China trade war is more than a dispute over tariffs – it is a high-stakes confrontation over who controls the future of innovation, design, and intellectual property. While recent years have seen China making strides in IP enforcement, a protracted trade battle could reverse progress, exposing American brands to new threats. As tensions persist, companies must stay vigilant, reinforcing their legal and technological safeguards to protect their most valuable assets.
