Fri, Sep 14, 2018 - Page 10 News List

US firms in China say tariffs hurting

EUROPEANS ALSO WORRIED:EU Chamber of Commerce president Mats Harborn said that ‘continuing along the path of tariff escalation is extremely dangerous’

AFP, BEIJING

The majority of US 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 yesterday.

The American Chamber of Commerce (Amcham) in China polled more than 430 US companies operating in the nation.

The 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 response hurting more than 60 percent of businesses, the poll showed.

It also showed looming tariffs on US$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 on Wednesday received potentially good news after US Secretary of the Treasury 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 US firms.

The unpredictability regarding the trade fight is hampering investment decisions, as investors need stability to make sound decisions, Beebe said.

Approximately one-third of firms are shifting supply chains out of China, or the US, and an equal proportion are delaying or canceling investment decisions, the survey showed.

The data, when coupled with the results of a similar survey of European firms, is troubling for the health of China’s economy, already slowing under the weight of Beijing’s battle to cut its debt mountain.

The survey released yesterday by the EU Chamber of Commerce in China polled nearly 200 European firms doing business in China and found that 17 percent are delaying investment or expansion plans.

The effects of the trade fight are overwhelmingly negative, EU Chamber president Mats Harborn said.

“We share the concerns of the US regarding China’s trade and investment practices, but continuing along the path of tariff escalation is extremely dangerous,” Harborn said.

About 42 percent of US companies report their goods are becoming less attractive to Chinese buyers.

Beebe said that could be the consequences of price increases or the psychology of how people make purchasing decisions.

“Chinese customers just see too much uncertainty around buying American and as a result they shift to alternatives,” Beebe said.

About half of US firms are making less money and a similar amount are reporting higher production costs, the Amcham survey showed.

Some of their employees are paying the price, with 12 percent of firms cutting staff.

Beebe said that might be because survey respondents were mostly smaller firms, adding that 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 US$200 billion in goods, “but that scenario risks underestimating China’s capability to continue meeting fire with fire,” Amcham chairman William Zarit said.

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 — imports of US goods last year totaled only US$130 billion.

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