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Trade war

Over 70% of US companies in China feel pain of trade war

Business council warns tariffs will wreak havoc on supply chains

Despite a spate of tariffs on both sides, most U.S. companies with Chinese manufacturing bases do not plan to relocate.
Despite a spate of tariffs on both sides, most U.S. companies with Chinese manufacturing bases do not plan to relocate.   © Reuters

WASHINGTON/BEIJING -- Trade tensions have affected 73% of U.S. companies with a presence in China, according to a survey released Tuesday by a business council including such big names like Apple and General Motors.

The president of the U.S.-China Business Council, Craig Allen, urged Washington and Beijing to seek solutions through negotiations rather than tariffs. "We very much hope that both sides are ready for the hard work of negotiating market access, intellectual property rights and technology transfer concerns," he said.

The survey was conducted in June among the council's 205 members. A leading 28% of respondents reported increased scrutiny from Chinese regulators, while 15% said they had delayed or canceled investment in the U.S. or China due to uncertainty. After tensions began heating up in March, the Chinese government appeared to be finding non-tariff means to pressure U.S. companies, such as by delaying customs inspections.

Allen warned that the tariff battle would "increase input costs for U.S. manufacturers and spur supply chain disruptions in the U.S. and Asia." Across July and August, Washington and Beijing each increased duties to 25% on $50 billion worth of each other's goods. On Monday, the White House announced additional 10% tariffs on $200 billion of Chinese imports, due to take effect Sept. 24, prompting Beijing to answer by preparing duties on $60 billion of U.S. goods.

Meanwhile, the American Chamber of Commerce in China found in a survey that over 60% of U.S. companies doing business in China are already feeling a negative impact from the $50 billion tariffs, and most expect additional pain from further duties. Moreover, 47% predict a strong negative impact from the U.S.'s $200 billion tariffs, and 27% a slight negative impact. The prospect of China's proposed 5% or 10% tariffs on goods like liquefied natural gas and lumber suggested a strong negative impact to 38% of respondents, and a slight one to 29%.

Those surveyed appeared cautious on the idea of moving production bases to the U.S. --- as President Donald Trump hopes the tariffs will prompt them to do -- with 64% reporting no plans to relocate outside of China. Just 6% of respondents said they intend to relocate to the U.S.

The AmCham China survey, conducted in Beijing and Shanghai from late August to early September, drew over 430 responses. Companies in the manufacturing industry made up 60% of respondents, and services companies 25%.

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