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U.S. businesses in China say the trade war is hurting — but still support tariffs

Tim Stratford, chairman of the American Chamber of Commerce in China, speaks before a news conference in Beijing on Tuesday.
Tim Stratford, chairman of the American Chamber of Commerce in China, speaks before a news conference in Beijing on Tuesday. (Jason Lee/Reuters)
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BEIJING — Two-thirds of American companies operating in China have experienced disruptions to their business as a result of the protracted trade war between the world’s two largest economies, according to a survey by the American Chamber of Commerce in China released Tuesday.

Still, there remains general support for President Trump’s tough approach to dealing with Beijing, with a narrow majority saying the tariffs should remain in place or be increased while negotiations to forge a trade deal continue.

“There’s a very strong feeling in the business community of hope that the negotiations will lead to some really concrete outcomes and put us on the path where the business environment will continue to improve in very meaningful ways,” said Tim Stratford, a former assistant U.S. trade representative who is now the chairman of AmCham China.

AmCham has 900 corporate members in China, working in industries ranging from aerospace and pharmaceuticals to energy and health care. Of the 771 members who received the survey, just less than half — 314 — responded to its annual survey, conducted between Nov. 13 and Dec. 16 last year. It was in the middle of that period that Trump gave China 90 days to agree to a trade deal or face a rise in tariffs from 10 percent to 25 percent on $200 billion worth of its exports to the United States.

That 90-day period ends Friday, but Trump announced Sunday night that he would delay raising the tariffs because “substantial progress” was being made in trade talks. 

Trump says he expects to sign a trade deal with China ‘fairly soon’

Almost 53 percent of respondents favored leaving the tariffs in place or increasing them to 25 percent as a way to keep the pressure on China while the negotiations continue; another 43 percent said they should be removed.

The tariffs have hurt both countries, increasing the price of Chinese-made televisions and baseball gloves for American consumers, and making American-grown soybeans and pork more expensive in China.

American companies including Apple, chipmaker Nvidia and construction machinery manufacturer Caterpillar have warned of weaker sales figures in China, although this is also linked to lower Chinese demand as the economy slows.

Trump’s constant exhortations for American businesses to move their operations back home, coupled with Chinese President Xi Jinping’s calls for “self reliance,” have only exacerbated business concerns about a protracted trade war leading to what is sometimes called economic “decoupling” — the world’s two biggest economies trying to separate from each other.

For American businesses working in the huge market that is China, home to 1.3 billion people who have enjoyed rapidly increasing levels of disposable income, the trade war has hurt.

Thirty percent of the respondents said they had suffered a loss in China in 2018, up from 26 percent the year before, and 20 percent said they do not expect their market share in China to grow this year. Among resource and industrial companies like agribusiness, oil and gas, and machinery, one quarter of respondents forecast flat or negative growth in 2019. 

Trump delays increase in tariffs on China, citing progress in trade talks

Two thirds of respondents said that the trade tensions had led them to change their business strategies, including delaying or canceling investment decisions, moving their supply chains or manufacturing operations, or even, in a few cases, exiting the Chinese market.

Still, the American companies said they generally felt that the pain would be worth it if the Trump administration could force China to make structural changes in its economy that would create better business conditions. They want better protections for intellectual property rights, an end to being forced to hand over their technology to local partners and more market access.

“Our members are hopeful that the uncertainty and losses and delays in business that have resulted from the trade negotiations and trade frictions will turn out to be worthwhile in the end,” Stratford said. “If not, then it would have been a tremendous waste. And if we don’t resolve some of these perennial problems now, then the question is what could happen in the future that would allow us to resolve them, when we couldn’t resolve them today?” 

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