Pressured by the surging tariffs on Chinese-made products imposed by the Trump administration, a majority of American companies that have manufacturing facilities in China are considering relocating production outside of China, but most of them have no plans to move back to the U.S. just yet, a recent poll found.
According to a survey of 219 companies by the American Chamber of Commerce in South China, a U.S. Chamber of Commerce-affiliated nonprofit representing over 2,300 American businesses in China, more than 70 percent of U.S. companies operating in southern China, the national hub for consumer product manufacturing, are considering either delaying investment there or moving production to other countries in order to keep the prices of final products stable for consumers.
Of the companies considering the relocation of their manufacturing, the most popular destination is Southeast Asia. Only one percent said they had plans to move manufacturing to the U.S.
The survey was conducted between September 21 and October 10, shortly after the U.S. imposed a 10 percent tariff on $200 billion worth of Chinese goods, and Beijing, in turn, slapped fresh tariffs on $60 billion of U.S. goods. (The 10 percent tariff on Chinese imports took effect on September 24. Staring January 1 next year, the rate will jump to 25 percent.)
About one-third of the surveyed companies are in the manufacturing sector; half are in the service sector; and the rest fall into other categories.
A few other main findings in the survey:
- One-third of respondents estimated that the latest round of tariff hikes, in conjunction with previous hikes on $50 billion worth of Chinese products, had caused a $1 million to $50 million decline in annual sales.
- Ten percent of the surveyed companies estimated an annual loss of over $250 million.
- Tariffs are hurting American companies more than their Chinese counterparts; 80 percent of the U.S. companies surveyed said they have suffered from tariffs, while 70 percent of Chinese companies in the poll said the same.
Chamber president Harley Seyedin warned that the full impact of the recent tariffs have not kicked in because many business orders for this year had been placed prior to the tariff window.
“The primary concerns at this point is that consumers in both nations may have to pay slightly more for many items now and likely much higher prices in the not too distant future,” Seyedin said in the survey report.
Several large American consumer goods brands have already warned consumers of future price hikes. In September, Walmart said the new tariffs on $200 billion of Chinese goods would cause price increases for hundreds of products it sells in the U.S., ranging from Christmas trees to dog food.
In July, after the tariffs on $50 billion of Chinese goods were imposed, Coca-Cola said it would have no choice but to pass the impact of these tariffs on to consumers, meaning a price increase for its drinks.