Tariffs prompt US firms to rethink China business: survey

US businesses in China are increasingly worried about the trade conflict between the US and China. They are bearing the brunt of tariffs and non-tariff barriers adopted in recent months, a new survey said.

Three-quarters of US companies in China say they are being hit hard by the ongoing US-China trade dispute, according to a new survey released Wednesday by the American Chamber of Commerce in China and its sister organization in Shanghai.   

The poll was conducted between May 16 and 20, days after Washington more than doubled duties on $200 billion (€179.3 billion) worth of Chinese goods. Beijing retaliated by charging higher tariffs on $60 billion of American products.

Read more: Trump's China tariffs are about more than just trade

Firms manufacturing in China were the hardest hit, with more than 80% reporting adverse affects from both US and Chinese tariffs. Nearly half of the 250 respondents said they have experienced non-tariff retaliatory measures in China since last year. About one in five US companies experienced increased inspections, similar to the proportion reporting slower customs clearance.

Accelerating relocation?

Furthermore, the tariffs and rising protectionist tendencies have prompted many American companies to change their supply chain strategies, the survey revealed. It showed that 35% of companies would adopt an "in China for China" strategy — sourcing within China and targeting the domestic market — as a result of tariffs. But over 40% said they were "considering or have relocated" production facilities outside China, with Mexico and Southeast Asia the preferred alternatives.

However, US President Donald Trump's efforts to persuade American firms to move their production lines back home don't seem to be effective, as fewer than 6% of the surveyed businesses said they have moved or are considering moving their factories to the United States.

Trump's tariffs and who they target

Solar panels and washing machines

The first round of tariffs in 2018 were on all imported washing machines and solar panels — not just those from China. A study by economists from the Federal Reserve Bank of New York, Columbia University, and Princeton University found that the burden of Trump's tariffs — including taxes on steel, aluminum, solar panels falls entirely on US consumers and businesses who buy imported products.

Trump's tariffs and who they target

China hike

On Friday May 10, 2019 President Donald Trump imposed sanctions on $200 billion (€178 billion) worth of Chinese goods. The move rasied tariffs from 10% to 25% on a range of consumer products, including cell phone, computers and toys. China's Commerce Ministry said it "deeply regrets" the US decision.

Trump's tariffs and who they target

Issues with the EU

In April 2019, the United States said it wanted to put tariffs on $11.2 billion worth of goods from the EU. The list includes helicopters and aircraft from Airbus as well as European exports like: famous cheeses like Stilton, Roquefort and Gouda, wines and oysters, ceramics, knives and pajamas.

Trump's tariffs and who they target

EU fights back

The EU imposed import duties of 25% on a $2.8 billion range of imports from the United States in retaliation for US tariffs on European steel and aluminum. Targeted US products include Harley-Davidson motorcycles, bourbon, peanuts, blue jeans, steel and aluminum.

Trump's tariffs and who they target

European automakers next?

May 17, 2019 is the deadline for President Trump to decide on imposing tariffs on vehicle imports from the EU. According to diplomats, Germany, whose exports of cars and parts to the United States are more than half the EU total, wants to press ahead with talks to ward off tariffs on automakers Volkswagen, Mercedes and BMW.

Trump's tariffs and who they target

India not exempt

India, the world's biggest buyer of US almonds, on June 21, 2018 raised import duties on the nuts by 20% and increased tariffs on a range of other farm products and US iron and steel, in retaliation for US tariffs on Indian steel. Trump said last month that he would end preferential trade treatment for India, which would result in US tariffs on up to $5.6 billion of imports from India.

Trump's tariffs and who they target

North American neighbors in tariff spat

Mexico on June 5, 2018 imposed tariffs of up to 25% on American steel, pork, cheese, apples, potatoes and bourbon, in retaliation for US tariffs on Mexican metals. While to the north, Canada on July 1 imposed tariffs on $12.6 billion worth of U.S. goods, including steel, aluminum, coffee, ketchup and bourbon whiskey in retaliation for US tariffs on Canadian steel and aluminum.

No end in sight

The Trump administration initiated the trade row last year and began slapping tariffs on imports from China, in a bid to extract major economic concessions from Beijing. The US also accuses China of unfair trade practices such as forced technology transfers, intellectual property theft and favoring domestic firms over foreign companies.

After a six month ceasefire, trade talks between the two sides broke down earlier this month, prompting the US decision to increase punitive duties on Chinese imports and Beijing's subsequent retaliation.

Read more: US-China trade war: Huawei's loss is Samsung's gain

The two sides have so far exchanged tariffs on more than $360 billion in two-way trade. The conflict has widened recently with Washington taking steps to bar US tech sales to Chinese telecom giant Huawei.

'Changed its mind overnight'

Meanwhile, China's Ambassador to the United States Cui Tiankai on Tuesday blamed the United States for the collapse of trade talks. Tiankai said in a Tuesday interview with Fox News that Washington repeatedly "changed its mind overnight" and sunk deals that could have ended the two countries' trade war.

Despite the rising tensions, more than half of respondents in the survey said they favor protracted trade negotiations to continue in order to address "structural issues to allowing them to operate on a more level playing field."

Others wanted a quick deal and a return to the "pre-tariff predictability and stability" that existed before the world's two biggest economies began their trade conflict.

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01:38 mins.
Business | 17.05.2019

Free trade continues without Trump

sri/rt (AFP, dpa, Reuters)

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