United States and China’s growing pains – When will trade talks resume ?

United States and China’s growing pains – When will trade talks resume ?

“While more than 70 pct of the U.S. companies are considering delaying or cancelling investment in China, and relocation of some or all manufacturing out of China, only half of their Chinese counterparts share the same consideration,” the AmCham report said.

The US-China trade war has gotten bitter and many American companies manufacturing in China are looking to relocate out of China, only 1% of these companies want to set up their manufacturing unit in North America.

American companies operating in China have stated that they are suffering more than companies from other countries according to a poll conducted by the American Chamber of Commerce in South China. The survey was conducted with 219 companies – one third of whom are from the manufacturing sector. 64% of these companies wanted to relocate their production lines.

While China faces competition from South-eastern countries such as Vietnam, South Korea and India – American companies are reportedly facing growing competition from Germany, Japan and Vietnam

“Customers are slowing down orders or not placing them at all,” Harley Seyedin, president of AmCham South China, told Reuters.

“It could very well be that people are holding back on placing orders until times are more certain or it could very well be that they are shifting to other competitors who are willing to offer cheaper products, even sometimes at a loss, in order to get market share,” he said.

“One of the most difficult things about market share is once you lose it, it is very hard to get back.”

United States imposed tariffs on $200 billion worth of Chinese goods which prompted Beijing to retaliate with additional tariffs on $60 billion of U.S. products, escalating a tariff war between the world’s two largest economies.

According to the survey – top companies in America were concerned about the rising cost of goods sold that subsequently resulted in reduced profits. The second biggest concern was managing procurement and ultimately reduced sales.

The pain get by American companies is something that needs to be discussed by both the governments as both the economies aren’t winning through imposing tough Tariffs. Beijing has tried to make an effort to resume the talks with U.S. since September only to be met with rebuffs from Washington.

Moreover, China is worried that even if they make an offer that even U.S. negotiators support the plan, President Trump might not approve it or give a positive response. The White House officials have faced similar scenarios hence they believe that Beijing might be backed into a corner and face humiliation if China presents their plan out in the open. Hence China is being careful and not willing to gamble its success at mitigating the trade war.