Survey: US companies in China hurt by tariff war

Posted on Thursday, September 13th, 2018 By Joe Mcdonald, AP Business Writer

BEIJING (AP) — Two-thirds of American companies in China say they have been hurt by the spiraling U.S.-Chinese tariff war, two chambers of commerce reported Thursday, and they appealed to Washington and Beijing to restart negotiations aimed at a settlement.

More companies say they will suffer if President Donald Trump goes ahead with a planned tariff hike on $200 billion of Chinese imports in their fight over Beijing's technology policy, according to the American Chambers of Commerce in China and in Shanghai.

In addition to tariffs, companies report China is retaliating by slowing down customs clearance and stepping up inspections and other bureaucratic processes, the chambers said.

The report adds to evidence of the mounting cost and disruption due to the conflict between the world's two biggest traders. Forecasters have warned it could cut up to 0.5 percent points off global economic growth through 2020 if all threatened tariff hikes go ahead.

"American companies are suffering both from China's retaliatory tariffs, and — ironically — from U.S. tariffs designed to harm the Chinese economy," said the two groups in a statement. "AmCham China and AmCham Shanghai urge both governments to return to the negotiating table."

The two sides have imposed 25 percent tariffs on $50 billion of each other's goods in the dispute over American complaints that Beijing steals or pressures companies to hand over technology. American officials say plans for state-led creation of Chinese champions in robotics and other fields violate its market-opening commitments and they worry U.S. industrial leadership might be eroded.

Beijing has issued a list of $60 billion of American imports for retaliation if Trump's next tariff hike goes ahead.

The chairman of the American Chamber of Commerce in China warned the Trump administration might be underestimating China's resolve to fight back.

"The U.S. Administration runs the risk of a downward spiral of attack and counterattack, benefiting no one," said William Zarit in the statement.

To avoid the tariffs, 30 percent of U.S. companies are looking at moving assembly out of the United States or China or finding new suppliers, the chambers said. They said nearly one-third are thinking about canceling or postponing investment decisions.

Also Thursday, the European Union Chamber of Commerce in China said one in six of its members that responded to a survey are delaying investment or expansion. It said the conflict is "causing significant disruptions to global supply chains."

China is running out of American imports for retaliation due to their lopsided trade balance but threatened unspecified "comprehensive measures" in June. That prompted worries it would use regulatory controls to disrupt business operations in China.

Another business group, the U.S.-China Business Council, said this week Chinese officials told it they were postponing accepting license applications from American companies in financial services and other fields until relations improve.

The two governments have given no indication of plans for more talks since envoys met in Washington on Aug. 22 but reported no progress.

Some 63.6 percent of more than 430 companies that responded to the American chambers' survey said profits and customer demand have fallen due to the U.S. tariffs and 62.5 percent said the same about retaliatory Chinese tariffs.

Some 74.3 percent said they would be affected if Washington's tariff increase of $200 billion of Chinese goods goes ahead. Some 67.6 percent said the same of China's planned retaliatory tariffs on $60 of American goods.

The survey was conducted between Aug. 29 and Sept. 5.

Some 52.1 percent of companies said Chinese authorities are slowing customers clearance, increasing inspections or imposing other "qualitative measures."

The European chamber said about 5 percent of companies reported shifting production out of the United States and about 7 percent were moving out of China.

That shows "neither side is 'winning,'" because "both are equally prone to losing companies," said the chamber.

China has tried without success to recruit Germany, France, South Korea and other governments as allies against Washington. Some of them have criticized Trump's tactics but many echo U.S. complaints about Chinese market barriers and industrial strategy.

"We share the concerns of the U.S. regarding China's trade and investment practices, but continuing along the path of tariff escalation is extremely dangerous," said the European chamber president, Mats Harborn, in a statement.

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