“The impact (of the trade tension) has been felt in ways that we have not seen reported in previous years,” Jake Parker, the business council’s senior vice-president, said at a survey launch event in Washington.

“Lost sales because of tariffs. Lost sales because of doubts around continued US company supply. And lost sales because US companies are not viewed as reliable suppliers,” he said.

“This has led to an erosion of US company market share, which has been absorbed by European, Japanese and Chinese companies,” Parker said. “This market share is built up over decades. Once lost, that market share is extremely difficult to regain.”

The survey results come as American business groups increasingly voice their opposition to the Trump administration’s trade policies.

In a strongly worded opinion piece published on Thursday in The Washington Post, US Chamber of Commerce Chief Executive Thomas Donohue said economic expansions often die “because of missteps and policy mistakes” rather than natural causes.

“And the biggest mistake our leaders could make right now — putting our economy at greater risk of a downturn — is to stoke further uncertainty,” he wrote in the piece titled, “Lift the tariffs, and restart trade talks with China now”.

On Wednesday, Americans for Free Trade, a coalition of 150 industry associations, appealed to US President Donald Trump to delay new tariffs on imports from China, arguing that the punitive measures against Beijing “come at the worst possible time”.

That action came less than a week after Trump had escalated trade tensions by announcing tariff hikes in response to China’s levying duties on US$75 billion worth of US products.

Hong Kong protests crisis offers Xi a way out of US trade war

To be sure, American companies’ negative view of the business landscape comes even though about half the 220 companies who took part in the annual survey said they expected China revenue to increase and their margins of profit in the country to perform better than the global average.

The survey was conducted in June, reflecting the tone of bilateral relations before the latest escalation in the tariff battle between the world’s two largest economies launched by Trump just over a year ago.

Nearly half the respondents reported losing sales and market share to foreign rivals mainly because the tariffs punitively put into place by both countries had increased product prices and hurt their competitiveness in the global marketplace.

Moreover, the deteriorating bilateral commercial relationship and the possibility that any Chinese company could be added to Washington’s “entity list” had Chinese customers increasingly viewing US companies as unreliable business partners.

Number of mainland Chinese business travellers to US drops amid trade war

The entity list, published by the US Department of Commerce, contains the names of foreign businesses, research institutions, governments and individuals that the US believes pose a national threat. Chinese telecoms giant Huawei Technologies was added to the list in May.

While China continues to be a priority market for most of the American companies surveyed, optimism is moderating with 22 per cent – a record low – saying they were optimistic about the five-year outlook for business in China.

The vast majority of companies reported that their China operations were profitable. As many as 46 per cent said profit margins for their China operations were higher than their overall margins this year, compared with 38 per cent in 2018.

About half the surveyed companies also reported increases in revenue from China businesses a year ago.

China ‘discussing’ next round of trade war talks with US as tariffs loom

But just a slight majority – a 26 per cent decline from a year ago – said they anticipated revenue increasing in 2020. That view suggested the tariff uncertainty, the trade conflict and a deteriorating market environment are hurting the business outlook for American companies in China.

This year’s survey results also had the lowest percentage of respondents saying they expected to accelerate their investments in the China market.

Nearly 30 per cent – twice as many as in 2018 – reported slowed, delayed or cancelled investment in the US or China because of uncertainty from heightened tensions. Rising costs in China – a long-term trend – also were a top factor in the negative outlook.

Despite the trade tensions, most of the surveyed American companies said they remained committed to the China market and few were moving to divest themselves of their China operations.

The China General Chamber of Commerce’s survey of Chinese companies operating in the US, released in June, also had a downbeat tone similar to that of its US counterpart.

UBS shifts to underweight equities as trade war escalates further

It said the trade war had created a “less welcoming” business environment for Chinese companies, shaking members’ confidence and discouraging further investment in the US.

Investment by Chinese companies in the US has fallen by nearly 90 per cent since its peak in 2016, including a sharp drop in 2018 and early 2019, with more companies reporting lower revenue and thinner profit margins than a year ago.

Additional reporting by Robert Delaney