As President Donald Trump escalated trade tensions throughout 2018, extra scrutiny and inexplicable shipment rejections are symbolic of the pitfalls American firms doing business in China have faced beyond merely tariffs.

Data on such disruptions is hard to come by. But more than one in four businesses that responded to a recent US-China Business Council survey said they had been subject to increased scrutiny from Chinese regulators as a result of the increasing trade tensions.

Those companies also ranked the political risk associated with the US-China relationship as their top concern for the first time ever.

American oranges, logs, calf skins and even Lincoln vehicles have encountered heightened customs reviews at Chinese ports this year.

Multinational companies, already accustomed to the sometimes difficult environment, have reported an uptick in the number of hurdles they must pass through to do business in the lucrative market.

The cherry growers’ group – which represents 2,500 growers in Idaho, Montana, Oregon, Utah and Washington state – relies heavily on getting their fresh fruit to consumers in China during a three-month window when nine varieties of cherries are ripe.

The growers ended up re-routing some sea shipments to Hong Kong or Taiwan and away from the increasingly lucrative Chinese market. Air shipments to China, which were normally cleared by customs in half a day, also dried up.

Chinese officials rarely tie such actions directly to any international tensions, they often go unnoticed outside the industries that are affected by them, trade experts said.

But they are part of a well-worn playbook for the Chinese government, which has used these and other non-tariff barriers for years during political squabbles.

Trump, a self-proclaimed “tariff man”, has so far imposed tariffs on about half of all Chinese imports and has also threatened to slap tariffs on the remaining US$267 billion of Chinese imports.

On the flip side, the total value of products that China imports from the US represents just one-fourth of what it exports, so Beijing cannot match US tariffs dollar for dollar.

But China has many other weapons in its arsenal to make doing business painful and costly.

Among the US companies’ complaints include delays in getting licences approved and increased regulatory requirements that seemed to grow worse in tandem with the worsening trade relationship between the two countries.

“These are subtle types of steps. It is very hard to be definitively responsive to them,” Mark D Herlach, a partner with the law firm Eversheds Sutherland in Washington, said. “It’s a hard thing to prove.”

Chinese customs authorities announced in May that they were strengthening their reviews and quarantine procedures for American apples and logs, citing concerns over the introduction of harmful organisms to China.

Joel Nelsen, president of the fruitgrowers’ trade group California Citrus Mutual, said that while the customs slowdowns had caused concern, retaliatory tariffs by the Chinese government that had increased their import prices by 40 per cent were more worrying

“We did around 5.5 million cartons of oranges last year and another 1 million of lemons,” Nelsen said. “China was a growing market for us. They paid a good price for a quality product.”

California oranges were also in demand in China because of their quality, Nelsen said, and it was difficult to find new buyers.

“Redirecting that volume to another export market is unlikely because of varied dynamics, so we will hope our domestic market will absorb the additional tonnage at a reasonable price,” he said.

Small difficulties become large losses

The ricochets from the hot-and-cold trade war between the world’s two largest economies have hit small businesses particularly hard.

A family-owned company in New England had a routine shipment of calf skins rejected this summer because the official count for the container of some 800 hides was off by a handful.

The shipment of calf skins was left idling at a port in southeastern China for more than a month before it was ultimately sent back to the US.

That resulted in a nearly US$50,000 loss for the company, which requested anonymity for fear of further retaliation from the Chinese government.

“Everything has been going on with this trade with no hiccups for years and years and years, and then all of a sudden we started running into some issues,” said Stephen Sothmann, the president of the US Hide, Skin and Leather Association. “This seemed absolutely out of left field.”

China’s erratic regulatory system also makes it difficult to establish what is related to the trade war, and what counts as business as usual in the Darwinian environment foreign companies face.

Moreover, it can be nearly impossible to determine what is a being applied as a top-down directive and what is down to the actions of an overzealous or corrupt local official.

Earlier this year, California-based manufacturer Beach House was suddenly told that supplies of the fabrics and plastics it uses to make children’s playhouses in two manufacturing facilities in the Chinese cities of Dongguan and Ningbo would now cost between 10 and 30 per cent more.

The company’s suppliers said changes to environmental regulations meant the factories making these components needed to be upgraded, Itai Leffler, the company’s group business development manager, said.

The company was given no notice, nor did any government officials ever explain whether environmental regulations had officially changed.

“It always feels questionable,” Leffler said. “We just got told that the material costs were up and that there was a crackdown. If we didn’t pay, we were told there would be a penalty.”

China’s Ministry of Commerce did not reply to requests for comment about whether China was deploying non-tariff barriers against US companies.

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Roy Liu, a trade lawyer in the Washington practice of law firm Hogan Lovells, said there was plenty of anecdotal evidence of increased targeting of US firms.

This included companies being pressured to admit Chinese Communist Party cells into the workplace, but “we can’t say conclusively there is a concerted effort to broadly punish US companies for doing business in China”.

he lingering uncertainty of the trade war also has made some local Chinese officials reluctant to meet American executives, according to Jason Wright, founder of Hong Kong-based business intelligence firm Argo Associates.

“That’s partly just because local officials mightn’t be sure of the overall situation, they may be very reluctant to step out and approve significant projects,” Wright said.

While Beijing has not been shy in the past about delivering strict and obvious economic punishments to other countries, the Chinese government appears to be more hesitant to antagonise the US in the current climate.

For example, the customs delays on fruits and other produce this spring disappeared after three weeks or so following high-level meetings.

“There’s a significant concern about once you pull the trigger on that type of policy approach, it has a very, very big chilling effect on US investor confidence and broader foreign investor confidence in China,” said Eric Altbach, a senior vice-president at the Albright Stonebridge Group who previously worked on China affairs at the Office of the US Trade Representative.

“The Chinese government view that as negative for their interest.”

Some, however, see the tougher inspections and other actions as one-offs.

Beyond a few American “poster children” being hit earlier this year, non-tariff barriers have not been a big deal for many US firms in China, William Zarit, the chairman of the American Chamber of Commerce in China (AmCham), said.

“We’re not seeing much in terms of the qualitative retaliation,” Zarit said. Chinese authorities “understand that foreign investment is in their interest.”

In a recent AmCham survey, some 47 per cent of the 430 businesses who responded said they had experienced no increase in non-tariff barriers.

About 27 per cent said they had experienced increased inspections in recent months, while 23 per cent said they had experienced slower customs clearance.

The survey was conducted between August 29 and September 5 – before the US imposed a 10 per cent tariff on US$200 billion in Chinese imports.

The Office of the US Trade Representative did not respond to repeated requests for comment on the issue. A US Commerce Department official said the agency tracks non-tariff-related issues and works with companies to resolve them, without offering further details.

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But the US has previously acknowledged that China has engaged in punitive action beyond tariffs.

Vice-President Mike Pence has accused senior Chinese officials of targeting US business leaders to lobby the Trump administration to soften its stance by “leveraging their desire to maintain their operations in China”.

Pence pointed to a case where Beijing “threatened to deny a business license for a major US corporation”, which he did not name, unless it spoke out against the administration’s trade policies.

Following a meeting between Chinese President Xi Jinping and Trump at the G20 leaders’ summit in Buenos Aires this month, the two countries announced a 90-day truce in which further tariff increases were put on hold, but tensions remain high.

Since then, Huawei’s chief financial officer Sabrina Meng Wanzhou has been arrested in Canada on the request of the US, a detention Beijing has suggested was politically motivated in an effort to pressure Beijing.

That has lead to concerns that China may retaliate by targeting American executives – although so far Beijing’s ire has concentrated on Canada.

Further muddying the waters, Donald Trump has said he would be willing to intervene in the case if it meant securing a trade deal.

Compared with China’s actions during other recent trade disputes, the measures taken against US firms appear minor to date.

During a diplomatic showdown with Japan in 2010, the Chinese government placed a temporary ban on exports of rare earth minerals to its neighbour.

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Two years later, sales of Toyotas and Hondas plummeted in China, after state-run media instigated a boycott of Japanese goods in another territorial dispute.

Japanese businesses, including sushi restaurants, were attacked as thousands of Chinese people took to the streets to protest.

Foreign companies can also face sabotage from private sector competitors, said Josh Gardner, the chief executive of Kung Fu Data, a Beijing-based company which runs e-commerce operations for international firms in China.

In one recent example, Gardner said a retail client was hit by local competitors lobbying tax officials to “fine and hamper” the company.

But he said: “That was just ‘Friday’.

“Everything that happens in China stays in China; people don’t talk about it because they don’t want to deal with the repercussions.”

Reporting by Chad Bray and Finbarr Bermingham (SCMP) in Hong Kong and Megan Cassella (POLITICO) in Washington, DC