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75% of US companies in China hurt by trade war; 20% may move out

Almost three-quarters of U.S. companies in China are experiencing a negative impact due to U.S.-China trade war and about one-fifth plan to partially or completely move out of the country, a survey by AmCham China and AmCham Shanghai showed.

Of the 250 companies surveyed, 74.9% are feeling some degree of negative effect from the 25% U.S. tariffs imposed on Chinese imports. A similar proportion of companies expect a hit from Chinese tariffs on the U.S., expected to be implemented June 1.

Asked how the combined tariffs will impact the businesses, 52.1% said they expect a decrease in demand for products, 42.4% expect an increase in the manufacturing cost, while 38.2% see their products' sale price rise.

To keep their businesses afloat, 35.3% plan to follow the "In China for China" strategy, effectively localizing operations and serving within China, while 33.2% are stalling or canceling their investment plans and 19.7% are considering partial or complete relocation out of China. Southeast Asia and Mexico are top destinations for businesses planning to move out.

Businesses are concerned over deteriorating bilateral relations and expect a further increase in their operating costs if no trade agreement is reached between the countries within the next two months.

Of the companies surveyed, 61.6% are manufacturing related and 25.5% are in the services sector.