Half of US firms in China foresee acute pain from new tariffs as trade war escalates, AmCham survey finds

The American Chambers of Commerce in Beijing and Shanghai found that US firms there expect to lose profits as high production costs and lower demand for products kick in

PUBLISHED : Wednesday, 12 September, 2018, 9:49pm
UPDATED : Thursday, 13 September, 2018, 9:09am

Three quarters of the American companies operating in China expect to be harmed – half of them significantly – by new tariffs set to be imposed on imports as the trade war intensifies, according to a survey by two business lobby groups.

The American Chambers of Commerce (AmCham) in Beijing and Shanghai found that firms foresee loss of profits, higher production costs, lower demand for products and reduced staff levels.

In the survey of 430 companies conducted by the chambers, 74.3 per cent of respondents said the punitive tariffs would have a “negative impact” on their businesses.

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More than 47 per cent of the businesses are expecting a “strong negative impact” if the White House fires the next barrage of tariffs at US$200 billion worth of Chinese goods destined for the United States.

The findings stand in contrast to the apparently upbeat mood that existed among US companies two months ago when 62 per cent of respondents in another AmCham survey expected to increase their investment in China, salivating over the potential of the mammoth market.

“If almost a half of American companies anticipate a strong negative impact from the next round of US tariffs, then the US administration will be hurting the companies it should be helping,” Eric Zheng, chairman of AmCham Shanghai, said in a statement.

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“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.”

The US has so far imposed levies on US$50 billion in Chinese goods, and President Donald Trump may move ahead with a plan to impose tariffs on a further US$200 billion of imports ranging from selfie sticks to semiconductors.

China struck back in June, levying punitive tariffs on imported goods from the US.

Beijing warned that it would use qualitative measures and tariffs to retaliate if the second round of tariffs by the US were to be implemented.

The latest survey by the two business lobby groups in Beijing and Shanghai showed that half of American companies believed they would suffer a loss of profits while 11.8 per cent of them have cut the number of employees.

Mainland-based US manufacturers need to pay extra dollars to import parts for their products targeting the Chinese market.

Because of the huge trade surplus with the US, the Chinese government would eventually fail to match US tariffs “dollar to dollar”, the report said.

But the authors added that more stringent inspections, slower customs clearance and other complications arising from tighter bureaucratic oversight are expected to affect American businesses.

“The US administration runs the risk of a downward spiral of attack and counter attack, benefiting no one,” said William Zarit, chairman of Beijing-based AmCham China, in a statement.