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US-China trade dispute drive US, European firms to cut investment in China

2018-9-20

EUROPEAN and US companies with a presence in China plan to reduce investment amid falling demand for products and higher manufacturing costs triggered by the trade row between the US and China.


A survey of 430 American companies conducted by AmCham China and AmCham Shanghai from August 29 to September 5 revealed that American companies believe an escalation in the trade row could cause even greater pain, reported Bloomberg.


The survey found that 60 per cent of the firms were hurt by the initial round of tariffs between the two governments, with 74 per cent foreseeing harm from future US tariffs and 68 per cent from potential Chinese retaliatory duties.


With the new round of trade barriers, "the US administration runs the risk of a downward spiral of attack and counter attack, benefiting no one," AmCham China chairman William Zarit was quoted as saying.


The AmCham survey underscores the damage that trade barriers could impose on economies in both countries by denting production, boosting prices and slowing investment. The US Federal Reserve in a monthly survey also said American companies are growing increasingly concerned about the fallout from a trade war.


Respondents of the AmCham survey were primarily in manufacturing, with automotive, machinery and chemical producers expected to take the biggest hit from future tariffs.


Profit losses, higher manufacturing costs and decreased product demand were some of the biggest downsides of the tariffs, according to the report. One-third of respondents are considering delaying or cancelling investments, especially those in the agribusiness industry.


Seventeen per cent of respondents to a separate survey of European companies reported they were delaying investment and expansion, while five per cent were moving production out of the US and seven per cent were shifting output from China.

 
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