American firms in China say tariffs war hurting business

BEIJING: Most United States businesses in China are hurting from the tariffs war between the two countries, forcing some companies to relocate abroad or refocus their business, a survey showed yesterday.

The recent poll by the American Chamber of Commerce in China and its sister organisation in Shanghai paints a gloomy picture of the business environment for American companies.

Three-quarters of the 250 respondents said increases in US and Chinese tariffs were having a “negative impact” on their business as orders were drying up owing to rising manufacturing costs and prices.

Nearly half said they had experienced non-tariff retaliatory measures in China since last year, with one in five reporting increased inspections and a similar amount enduring slower Customs clearance.

Another 14 per cent complained of other complications from increased bureaucratic oversight and regulatory scrutiny.

The US and China have so far exchanged tariffs on more than US$360 billion (RM1.5 trillion) in two-way trade.

The poll was conducted from May 16 to May 20, days after the US more than doubled duties on US$200 billion in Chinese goods and Beijing retaliated with higher duties on US$60 billion in American products.

The poll showed that 35 per cent of companies would adopt an “in China for China” strategy — sourcing within China and targeting the domestic market — as a result of tariffs.

But more than 40 per cent said they were “considering or have relocated” production facilities outside China, with Mexico and Southeast Asia the preferred alternatives for manufacturing.

Fewer than six per cent said they had moved or were considering moving their factories to the US.

Trump launched the trade war last year to extract profound economic reforms from Beijing.

Despite the pain, more than half of respondents said they favoured protracted trade talks to continue to address “structural issues allowing them to operate on a more level playing field”.

Others wanted a quick deal and a return to the “pre-tariff predictability and stability”.