September 13, 2018 / 1:32 AM / 12 days ago

U.S. firms in China feeling 'clear and far reaching' trade war pinch: survey

SHANGHAI (Reuters) - American companies in China are being hurt by tariffs in the growing trade war between Washington and Beijing, according to a survey of hundreds of firms, prompting the U.S. business lobbies behind the poll to urge the Trump administration to reconsider its approach.

FILE PHOTO: A U.S. flag is seen during a welcoming ceremony in Beijing, China, November 9, 2017. REUTERS/Thomas Peter/File Photo

The United States and China have imposed tariffs on $50 billion of each other’s goods since July as trade frictions between the world’s two biggest economies worsened, despite several rounds of negotiations.

President Donald Trump has criticized China’s record trade surplus with the United States, and has demanded that Beijing cut it immediately, threatening further tariffs on an additional $200 billion worth of goods - and possibly more.

The negative impact of the tariffs on U.S. companies has been “clear and far reaching”, according to the joint survey by AmCham China and AmCham Shanghai published on Thursday.

More than 60 percent of U.S. companies polled said the U.S. tariffs were already affecting their business operations, while a similar percentage said tariffs by China on U.S. goods were having an effect on business.

Companies reported the tariffs were pressuring profits, reducing demand for their products and driving up production costs.

Roughly three-in-four firms surveyed said duties on an additional $200 billion worth of Chinese goods would hurt business further, and close to 70 percent said additional retaliatory Chinese tariffs would be bad for business.

“This survey affirms our concerns: tariffs are already negatively impacting U.S. companies and the imposition of a proposed $200 billion tranche will bring a lot more pain,” said Eric Zheng, chairman of AmCham Shanghai.

“If almost a half of American companies anticipate a strong negative impact from the next round of U.S. tariffs, then the U.S. administration will be hurting the companies it should be helping,” he said.

“We support President Trump’s efforts to reset U.S.-China trade relations, address long-standing inequities and level the playing field. But we can do so through means other than blanket tariffs.”

On Wednesday, Larry Kudlow, who heads the White House Economic Council, told Fox Business Network that Treasury Secretary Steven Mnuchin had sent an invitation to senior Chinese officials to restart trade talks.

More than 430 companies responded to the survey between Aug. 29 and Sept. 5, which Ken Jarrett, president of AmCham Shanghai, said had been conducted in part to provide AmCham with data for meetings with members of congress later this month.

China may not be able to match future U.S. tariffs dollar for dollar and has warned that it would take other measures.

More than 52 percent of respondents to the survey reported already suffering the consequences of such measures, mainly through increased inspections, slower customs clearance and “other complications from increased bureaucratic oversight or regulatory scrutiny”.

Nearly two-thirds of the companies that responded have not relocated nor were they considering moving manufacturing facilities away from China. But of those that were, the top destinations were Southeast Asia and the Indian subcontinent.

Only 6 percent said they were considering relocation back to the United States, the survey said.

Meanwhile, nearly a third of companies said they were considering delaying or cancelling investments, underscoring the heightened uncertainty created by the trade tensions.

About 30 percent said they were adjusting supply chains by seeking to source components and/or assembly outside the U.S., and about the same number were seeking to source components and/or assembly outside China.

On Wednesday, more than 60 U.S. industry groups launched a coalition - Americans for Free Trade - to take the fight against the tariffs public.

(This corrected version changes million to billion in paragraph three)

Reporting by John Ruwitch; Editing by Kim Coghill

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