The European Union Chamber of Commerce in China surveyed its member companies to better understand how the recently escalated tariffs on a variety of products traded between the U.S. and China affected European firms doing business in China. Responses were collected from 193 respondents across a wide variety of industries. This survey ended on September 3, and thus does not reflect any potential changes that may occur after that date. At the time of publishing, the Trump Administration had not yet decided to move forward with the addition of another USD200 billion worth of products imported from China to the current levies.

The U.S.-China trade war is causing significant disruptions to global supply chains and is seriously impacting companies that are neither Chinese nor American. Respectively, 53.9% and 42.9% of respondents viewed the American and Chinese tariffs negatively, which is more than ten times the number that viewed them positively.

Negative views of both country’s tariffs are common among European businesses in China. However, 53.9% of members viewed the U.S. tariffs on Chinese goods negatively, roughly 12 percentage points higher than the number that reported negative views of the Chinese tariffs levied on American imports. As there are far more goods produced in China for export to the U.S. than there are produced in the U.S. for export to China, a higher proportion is expected. However, the high rate of negative views on either side of the trade war is emblematic of the degree of interconnectivity in the global economy.

Neutral views are common. This reflects the reality that many European firms in China produce for the Chinese market, and that many of those firms rely on local suppliers or suppliers in countries other than the U.S. Positive effects from tariffs imposed by either the U.S. or China were rare, and diffuse across sectors. There were no clear patterns for which industries were more likely to see the tariffs positively.

When asked what measures companies were taking to respond to the tariffs, roughly the same number of members reported that they are relocating out of the U.S. or China respectively, indicating that neither side is ‘winning’, as both are equally prone to losing companies as a result.
The most common response was inaction and continued monitoring of the situation. However, the second and third most common responses were to hold up on investment/capital expenditure and/or to hold up on business expansion efforts. Due to some overlap in these two responses, a total of 17% of respondents that might have otherwise contributed further towards growth are opting not to do so due to the looming uncertainty caused by the trade war, according to a briefing paper by the European Chamber.

The American Chamber of Commerce in China and the American Chamber of Commerce in Shanghai also jointly released a study on the impact of the tariffs imposed by China and the U.S. on each other since July. Close to two-thirds of respondents said the tariffs are having a negative impact. The survey said 63.6% reported the initial U.S. tariffs on USD50 billion in Chinese goods are affecting their business operations. When asked about the implementation of the possible additional U.S. and Chinese tariffs, the proportion of members who cited a negative impact jumped to 74.3% and 67.6%, respectively. The percentage reporting a “strong negative impact” doubled from 21.5% to 47.2% for the U.S. tariffs. Over 430 companies responded to the survey, the China Daily reports.

The European Union and China must urgently strengthen relations to “alleviate the disruption” to the global economy, Nicolas Chapuis, the new EU Ambassador to China, said. He also called for progress in discussions between China and the EU about reform of the World Trade Organization (WTO), ongoing negotiation of a China-EU investment treaty and an agreement on protecting the intellectual property of European and Chinese products. “In this shifting of the global situation, Europe must bring, with China, the building blocks of stability and prosperity,” said Chapuis at a press conference in Beijing. “This is not only important to the EU and China, it is crucial to the rest of the world, he added. Chapuis said it was normal for two big economies to have “frictions and tensions” but the EU remained open to Chinese investments. “We do not want less Chinese investment; we want more,” he said.