Trade war pushes Asian firms to shelve investment plans

US-China trade tensions are pushing firms across Asia to delay or cancel investment decisions and adjust their supply chains, according to the American Chamber of Commerce in Singapore.

Half of respondents said they were considering putting on hold or scrapping investment, according to a survey conducted Sept. 27-Oct. 6 by AmCham Singapore and Blackbox Research. About 38 percent are now looking to source components outside of China, while 30 percent are seeking alternatives to US suppliers.

The data lend fresh insight to trends that have percolated throughout the second half of 2018 as the world’s two biggest economies exchanged tariffs and protectionist threats. Firms responded ahead of a meeting last weekend between Presidents Donald Trump and Xi Jinping that yielded a fragile truce, putting on hold an increase in US tariffs that was planned for the start of 2019.

AmCham Singapore’s results released Wednesday were slightly starker than a recent poll by AmCham China and AmCham Shanghai, which showed about one-third of the respondents were curtailing investment.

The AmCham Singapore survey incorporates data from 179 Singapore-based respondents, with 63 percent being American firms. About a quarter of respondents are in the manufacturing industry.

About four in 10 respondents said their business was negatively affected by US-imposed duties, with 35 percent reporting the same for China’s tariffs during the first round of duties imposed in July and August.

About half said they expected the much bigger second round of tit-for-tat tariffs in September to harm their businesses, with US firms far more worried (57 percent) versus non-American firms (33 percent).