Withdrawal of operations at Trump’s request, US businesses consider giving large-scale global growth opportunities to Chinese companies.
Last weekend, on his personal page, Mr. Trump asked American businesses to immediately look for alternatives to China and demand to bring the company home, made in the United States.
More importantly, the expert said that: “Such a move would create an unprecedented rift in trade and economic relations between the world’s two largest economies”. This uncertainty is detrimental to businesses of both countries. Mr. Jake Parke warned that leaving China is missing a large-scale global growth opportunity.
“The only way to solve the challenges that US companies face when operating in China is that the two sides continue to negotiate, reach an agreement to abolish tariffs, put a relationship on a stable trajectory, predictable and constructive”, he said.
According to analysts, another consequence of trade tension may be that Chinese companies will gain greater market share. Data are showing that they are switching to buying agricultural products from other countries, especially Latin America. While investors are concerned about the effects of escalating trade tension with US corporations, Chinese businesses are beginning to look for many other business opportunities.
“In the short term, rising US tariffs will have a negative impact on the profits of Chinese businesses. In the long term, if trade tension continues to affect the structure of the global industrial chain. This forces local firms to change their production and transformation practices, upgrade operations”, said Wang Zhe, an economist at Caixin Insight.
Mr. Trump focused on tariffs as the main tool in trade disputes, but it did not produce a clear effect on making China change attitudes. Meanwhile, the analysis from Chris Rogers, a researcher at Panjiva, of the S&P Global Market Intelligence, said that prices of some goods such as chemicals and Chinese furniture imported into the US are declining.
Mr. Wei Jianguo – former Vice Minister of China Ministry of Commerce, who is currently the vice president and deputy director of the Center for International Economic Exchange in Beijing, said that the country’s companies are suffering from tax costs but not much. Most of them are waiting for a solution from the negotiating results.
The same goes for American businesses, Mr. Parker said, some are shifting to other suppliers while others maintain supply chains and try to cut profits or shift costs to consumers as much as possible.
The two largest economies in the world have plunged into the escalating trade conflict over the past year. The dispute initially focused on a large US trade deficit with China. Subsequently, disagreements extended to many other issues, including China’s broad market access opportunities, which the US considered unfair or as technology transfer.
The latest retaliation tax marks a reversal with what US President Donald Trump and Chinese President Xi Jinping agreed in late June, that the two countries will not levy more taxes on each other’s goods.
“Chinese leaders may not make a definitive decision to rule out a trade deal with Trump until after the US election. However, they are increasingly skeptical about the possibility of Trump. can be a negotiating partner and not willing to make significant concessions to appease him”, commented Michael Hirson – Eurasia Group expert.