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Tuesday, May 21, 2024

US-China trade tussle takes its toll on businesses

Businesses in China have been on a downfall as US-China trade war wages on. US imposed trade tariffs on Chinese products and China lashed back with the same move. Business owners have started moving out of China but want a better trade environment between the two giants that could benefit all.


Most US businesses in China are hurting from the tariffs war between the two countries, forcing some companies to relocate abroad or refocus their business, a survey showed Wednesday.

The recent poll by the American Chamber of Commerce in China and its sister organization in Shanghai paints a gloomy picture of the business environment for American companies.

Three-quarters of the 250 respondents said increases in US and Chinese tariffs are having a “negative impact” on their business as orders were drying up owing to rising manufacturing costs and prices.

Read More: US-China trade standoff to affect global economy

Nearly half said they have experienced non-tariff retaliatory measures in China since last year, with one in five reporting increased inspections and a similar amount enduring slower customs clearance. And 14 percent complained of other complications from increased bureaucratic oversight and regulatory scrutiny.

US-China Trade War

The United States and China have so far exchanged tariffs on more than $360 billion in two-way trade.

The poll was conducted from May 16 to May 20, days after the United States more than doubled duties on $200 billion in Chinese goods and Beijing retaliated with higher duties on $60 billion in American products.

More than half of respondents said they favor protracted trade talks to continue in order to address “structural issues allowing them to operate on a more level playing field

The poll showed that 35 percent of companies would adopt an “in China for China” strategy – sourcing within China and targeting the domestic market – as a result of tariffs.

But more than 40 percent said they were “considering or have relocated” production facilities outside China, with Mexico and Southeast Asia the preferred alternatives for manufacturing.

Fewer than six percent said they have moved or are considering moving their factories to the United States, undercutting President Donald Trump’s hopes of seeing American companies move production back home.

Read more: US China trade standoff; global market plunges

Trump launched the trade war last year to extract profound economic reforms from Beijing, accusing China of seeking to forge global industrial dominance through massive state intervention in markets and the theft of US technology.

Despite the pain, more than half of respondents said they favor protracted trade talks to continue in order to address “structural issues 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 locked horns.

After talks ended in Washington this month China’s top trade negotiator Liu He said another round would take place in Beijing, but neither side has announced a date.

Trump has left open the door for reconciliation, saying he expected a “fruitful” meeting next month with his Chinese counterpart Xi Jinping at a Group of 20 summit in Japan.

Boycott of American Products

Chinese consumers may be staging an informal boycott of some American products and that could be a factor behind Apple’s revenue shortfall. Apple saw a major downfall as people in China started burning their phones and throwing them in dustbin or availing to exchange them at a lower rate with Huawei.

Read more: Boycott apple; movement gains new traction in China

AFP story with additional input by GVS news desk