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US companies in China say tariffs are hurting: survey
BEIJING, Sept 13, 2018 (BSS/AFP) – The majority of American companies in
China say they are hurting from the escalating US-China trade spat, reporting
increased costs, lower profits and stepped-up scrutiny, a survey showed
Thursday.
The American Chamber of Commerce in China survey polled more than 430 US
companies operating in the country and provides the first detailed look at
how Donald Trump’s trade fight has harmed business.
His first round of tariffs this summer hit $50 billion in Chinese goods
like high-end technology parts and manufactured goods, while Beijing fired
back dollar-for-dollar at US soybeans, autos and other farm goods.
But US firms are feeling whiplash from both sides as they sell and make
goods in China, with Washington’s border tax increase and Beijing’s counter-
punch hurting more than 60 percent of businesses, according to the poll.
It also showed looming tariffs on $200-billion of Chinese goods is
expected to expand the pain to three-quarters of firms.
Chamber president Alan Beebe said the poll would provide officials in
Washington and Beijing with facts on how the tariffs are playing out.
Businesses received potentially good news on Wednesday after Treasury
Secretary Steven Mnuchin proposed a fresh round of trade talks between the
economic superpowers to avert a full-blown trade war.
The talks could stave off the growing costs for American firms, though the
two sides have failed to reach an agreement over several rounds of
negotiations in spring and summer.
The unpredictability around the trade fight is hampering investment
decisions as investors need stability to make sound decisions, Beebe said.
Roughly a third of firms are shifting supply chains out of China, or the
US, and an equal proportion are delaying or cancelling investment decisions,
the survey showed.
– ‘Too much uncertainty’ –
Some 42 percent of American firms report their goods are becoming less
attractive to Chinese buyers. Beebe said that could be the consequences of
price increases or the psychology around how people make purchasing
decisions.
“Chinese customers just see too much uncertainty around buying American
and as a result they shift to alternatives,” Beebe told AFP.
About half of American firms are making less money, and a similar amount
are reporting higher production costs, according to the survey.
Some of their employees are paying the price, with 12 percent of firms
cutting staff.
Beebe said that may be because survey respondents were mostly smaller
firms, adding larger companies “have the ability to withstand the impact of
the tariffs but it’s going to be the smaller ones that are going to feel the
pinch sooner”.
The White House believes China will wave the white flag after the next
round of tariffs on $200 billion in goods, said William Zarit, the chamber’s
chairman.
“But that scenario risks underestimating China’s capability to continue
meeting fire with fire,” he added.
US companies are particularly worried about the “qualitative measures”
Beijing has threatened to take as it becomes unable to respond to tariffs
dollar-for-dollar — US goods imports last year totalled only $130 billion.
More than half of firms say they are already feeling Beijing’s wrath, with
27 percent reporting increased inspections, 19 percent feeling heightened
regulatory scrutiny and 23 percent witnessing slower customs clearance.
“The US administration runs the risk of a downward spiral of attack and
counter attack, benefiting no one,” Zarit said.
BSS/AFP/HR/1045