The trade war is biting into profits, leading some companies to delay investments and others to consider a move.
Over 70 percent of US firms in southern China are considering delaying further investments or moving their manufacturing operations to other countries as a consequence of the trade war between the two nations, according to a business survey released Monday.
Based on the poll by the American Chamber of Commerce in South China, which surveyed 219 companies–one-third of them from the manufacturing sector–US firms feel they are suffering more from the dispute than companies from other countries.
The survey was conducted between Sept. 21 and Oct. 10, shortly after the US imposed tariffs on $200 billion worth of Chinese goods, prompting Beijing to retaliate with additional tariffs on $60 billion of US products.
US duties are set to rise sharply again on Jan. 1.
According to the survey, the trade war is already creating a geographical shift in both supply chains and industrial clusters, mostly towards Southeast Asia.
US companies reported facing increased competition from rivals in Vietnam, Germany and Japan, while Chinese companies said they were facing growing competition from Vietnam, India, the United States and South Korea.
Companies in the wholesale and retail sectors have suffered the most from US tariffs, while agriculture-related businesses have been most hit by Chinese measures, the study found.
Around 85 percent of US companies said they have suffered from the combined tariffs, compared with around 70 percent of their Chinese counterparts.
The top concern of firms was the rising cost of goods sold, which resulted in reduced profits. Other worries included difficulties managing procurement and fewer sales.
Nearly half the companies surveyed also said there had been an increase in non-tariff barriers, including rising levels of bureaucratic oversight and slower customs clearance.
The findings likewise suggest that export-reliant Chinese cities and provinces are facing growing strains. Guangdong, China’s biggest province by gross domestic product, reported a drop in exports in the first eight months of the year compared to 2017.
Notably, sixty-four percent of recipients said they were considering relocating production lines to outside of China, but only one percent said they had any plans to establish manufacturing bases in North America.