From car giants to food firms, American companies calculate cost of China-US trade war

Agricultural behemoth Cargill and aerospace corporation Boeing urge Beijing and Washington to get back to the negotiating table

PUBLISHED : Sunday, 17 June, 2018, 1:09pm
UPDATED : Sunday, 17 June, 2018, 11:16pm

Companies and trade groups in the United States and China have raised concern about the potential fallout from the escalating trade dispute between the world’s two biggest economies.

Beijing retaliated immediately to tariffs on tens of billions of dollars worth of Chinese imports imposed by US President Donald Trump on Friday, igniting a trade war that threatens to cut into the pair’s massive bilateral trade – potentially harming exporters and US multinationals keen on China’s huge market.

Top among American products hit by China’s duties are agricultural exports, with soybeans, sorghum, oranges, pork, poultry and beef included in the US$34 billion in goods targeted for higher border taxes starting next month.

Agricultural trader Cargill, the largest US private company, called for dialogue between Beijing and Washington so businesses, farmers and consumers would not be caught up in an all-out trade war.

“Trade conflict ... will lead to serious consequences for economic growth and job creation and hurt those that are most vulnerable across the globe,” Cargill vice-president Devry Boughner Vorwerk said.

A spokeswoman for grain trader Archer Daniels Midland also said bilateral dialogue should be pursued, adding that China “continues to be an important export market for American food and agriculture”.

China accuses US of igniting trade war with tariffs but there could be more talks ahead

Friday’s announcements cap months of sometimes fraught shuttle diplomacy between Washington and Beijing, in which Chinese offers to buy more US goods failed to assuage Trump’s grievances over a soaring trade imbalance and the country’s industrial development policies.

Beijing has left the door open to negotiations, even as it matched Washington with tariffs and bellicose rhetoric.

“The Donald Trump administration has once again proved inconsistent and precarious,” state-run newspaper China Daily said in an editorial on Saturday.

It added that given the “frequent flip-flopping” in the US, “it is still too early to conclude that a trade war will start”.

US trade groups also stepped up their criticism, while some large companies such as Boeing said they were beginning to evaluate the tariffs’ possible effects.

Boeing earned about 12.8 per cent of its 2017 revenues from China and is seen as among the US multinationals more vulnerable to a full-on trade war.

“We are assessing the impact these tariffs and any reciprocal action could have on our supply chain and commercial business,” Boeing spokesman Charles Bickers said.

“We will continue to engage with leaders in both countries to urge a productive dialogue to resolve trade differences, highlighting the mutual economic benefits of a strong and prosperous aerospace industry.”

‘If China closes, that’s our largest market’: US businesses grit their teeth as trade war looms

While praising the Trump administration for dropping an earlier plan to place levies on key equipment and machinery used by the industry, the American Apparel & Footwear Association said on Friday that China’s retaliatory measures could harm American farmers and textile manufacturers and add costs to the industry’s supply chain.

“President Trump is fixated with tariffs, which he believes he can wield freely; but there are grave consequences,” association president Rick Helfenbein said. “Congress needs to step in now to end this dangerous obsession.”

Other trade groups opposing the US tariffs included the Business Roundtable and the US Chamber of Commerce.

US carmakers, which have targeted China as a key growth market, are also expected to be hit by the bruising tariffs.

American car giant Ford has sold 338,386 cars in China so far this year, about one-third the number in the US, and had welcomed a Chinese plan to lower tariffs on car imports. It had even planned to cut prices for its imported Lincoln vehicles.

That may be in jeopardy as gas-powered and electric vehicles are due to be slapped with the border tax increase.