Section 301 of the US Trade Act of 1974, allows the U.S. president to unilaterally impose tariffs or other trade restrictions to protect U.S. industries from “unfair trade practices” of foreign countries. The investigation followed President Trump's Memorandum of August 14, 2017 instructing to consider the possible initiation of an investigation against China. United States has shown concerns over violations of intellectual property rights and other unfair technology transfers by China. It Alleged that China’s policy of forcing foreign companies to turn over technology to Chinese joint venture partners and failure to crack down on intellectual property theft have been longstanding problems for several U.S. Administrations.
China has criticized this move by United States terming it irresponsible and alleging disregard of World Trade Organization rules and use of domestic law to initiate a trade investigation against China. It emphasized its role as emerging Intellectual Property Global leader claiming that in year 2015, China's patent office received a record one million applications, the most reported in any country in a single year. But at the same time also acknowledged that China's IPR protection faces challenges and urged developed countries such as the United States to give fair evaluation to China's IPR protection achievements instead of using IPR as an excuse to launch trade protection.