US Chambers of Commerce warn of tariff escalation

The additional tariff on $200 billion in Chinese goods threatened by the United States government will generate a strong negative impact on US companies conducting business in China, the US business chambers announced on Thursday.

The American Chamber of Commerce in China and Shanghai released the results of a joint survey measuring the impact of the tariffs imposed by the US and Chinese governments since July. With over 430 companies responding to the survey, the results provide a substantive and accurate gauge of the consequences of the tariffs for US businesses in China.

Close to two-thirds of respondents said the tariffs are having a negative impact, with 63.6 percent reporting the initial $50 billion of tariffs from the US are affecting their business operations, while a similar number (62.5 percent) said the same about China's $50 billion worth of tariffs.

Asked about the implementation of additional US and Chinese tariffs, the proportion of members who said it would have a negative impact jumped to 74.3 percent and 67.6 percent, respectively, with the percentage of companies reporting a "strong negative impact" doubling from 21.5 percent to 47.2 percent for the US tariffs.

Businesses have been affected in several ways, but members listed increased costs of manufacturing (47.1 percent) and decreased demand for products (41.8 percent) as the two most significant downsides.

"This survey affirms our concerns: tariffs are already negatively impacting US companies and the imposition of a proposed $200 billion tranche will bring a lot more pain. If almost a half of American companies anticipate a strong negative impact from the next round of US tariffs, then the US administration will be hurting the companies it should be helping," said Eric Zheng, chairman of AmCham Shanghai.

"The White House has threatened to fire the next barrage of tariffs at $200 billion more Chinese goods, expecting with this onslaught or subsequent ones that China will wave a white flag. But that scenario risks underestimating China's capability to continue meeting fire with fire," said William Zarit, chairman of AmCham China. "The US Administration runs the risk of a downward spiral of attack and counter-attack, benefiting no one."