US-China trade tensions will linger for years, American firms fear

The American Chamber of Commerce in Shanghai said Wednesday there's a growing concern among U.S. companies in China that trade tensions between the two economic superpowers will last for years.

More than a quarter (26.9%) of the 346 respondents to AmCham’s annual survey said they believe U.S.-China trade tensions will last indefinitely, up from 16.9% last year, the group said Wednesday. Another 22.5% believe the trade skirmish will last another three to five years, versus 12.7% in 2019.

Nearly 71% of respondents believe U.S.-China trade tensions will be the biggest challenge over the next three to five years.

President Trump has in recent months called on the U.S. to “decouple” from China after lockdowns aimed at slowing the spread of COVID-19 disrupted supply chains, and stoked fears that the U.S. has become too reliant on Beijing for the production of goods and key technologies.

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“Despite the phase one trade deal, our members are less sanguine than last year about how long U.S.-China trade tensions will last,” AmCham said. “Growing talk of decoupling may have weighed on minds.”

The COVID-19 pandemic, which originated in the Chinese city of Wuhan and has infected more than 6.3 million Americans and killed more than 189,600, spread to the U.S. weeks after the signing of Trump's signature trade deal and just before talks on a second phase of the pact were to begin.

Lockdowns aimed at slowing the spread of the virus spiraled the U.S. economy into its sharpest economic slowdown of the post-World War II era as more than 59 million Americans found themselves at least temporarily out of work.

Technology, hardware, software and services (50%) and pharmaceuticals, medical devices and life sciences (42.9%) were the most pessimistic industries in believing tensions would last indefinitely.

The trade uncertainty has prompted U.S. companies to scale back their plans to increase investment in China, with just 28.6% of respondents saying they planned to do so, down from 47.2% in 2019.

Despite plans to scale back, 92.2% of respondents said they had no plans to exit China. The majority of those that did had global revenue of less than $50 million.

Meanwhile, 70.6% of the more than 200 companies with manufacturing in China said they don’t plan on moving production out of the country. Just 3.7% of those planning to relocate manufacturing expected to return their supply chains back to the U.S.

Almost 32% of firms surveyed said the trade hostilities were having a negative impact on their ability to retain staff in China.

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“Our member companies are uncomfortable with the tension, they'd like for that to go away, but at this point it's not driving them out of China,” Ker Gibbs, president at the American Chamber of Commerce in Shanghai, told FOX Business.