US Firms in China Feel the Trade War Pinch

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American firms in China feel the pinch from trade war between China and the US, said AmCham China today.

According to the results of a survey of 430 American firms during Aug 29-Sep 5, close to two-thirds of respondents said that the tariffs are having a negative impact, with 63.6% reporting that the initial US$50 billion of tariffs from the US are affecting their business operations.

In addition, a similar number (62.5%) said the same about China’s $50 billion worth of tariffs.

Asked about the implementation of additional US and Chinese tariffs, the proportion of members who said it would have a negative impact jumped to 74.3% and 67.6%, respectively, with the percentage of companies reporting a “strong negative impact” doubling from 21.5% to 47.2% for the US tariffs, AmCham China noted.

The reaction to the anticipated additional Chinese tariffs is similar, with those expecting a “strong negative impact” rising from 16% to 38.2%, the organization pointed out.

Businesses have been affected in several ways, but members listed increased costs of manufacturing (47.1%) and decreased demand for products (41.8%) as the two most significant downsides.

“This survey affirms our concerns: tariffs are already negatively impacting US firms and the imposition of a proposed $200 billion tranche will bring a lot more pain,” said Eric Zheng, Chairman of AmCham Shanghai. “If almost a half of US firms anticipate a strong negative impact from the next round of American duties, then the US administration will be hurting the companies it should be helping,”

“We support President Trump’s efforts to reset US-China trade relations, address long-standing inequities and level the playing field. But we can do so through means other than blanket tariffs,” he added

William Zarit, Chairman of AmCham China said the US underestimates China’s capability of getting even.

“The White House has threatened to fire the next barrage of tariffs at $200 billion more Chinese goods, expecting with this onslaught, or subsequent ones, China will wave a white flag. But that scenario risks underestimating China’s capability to continue meeting fire with fire,” said William Zarit, Chairman of AmCham China. “The US Administration runs the risk of a downward spiral of attack and counter attack, benefiting no one.”

Other major findings:

  • More than 52% of firms reported already suffering the consequences of such measures, mainly through increased inspections, slower customs clearance and other complications from increased bureaucratic oversight or regulatory scrutiny
  • Almost two-thirds of firms have not relocated, Neither are they considering moving manufacturing facilities away from China. But those that have such thoughts, the top locations are Southeast Asia and the Indian subcontinent.
  • Only 6% consider relocation back to the US
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