What tariff moves by the US and China are reshaping risks?

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US and China's Escalating Tariffs Reshape Business Risks

The United States and China have significantly increased punitive customs tariffs on each other, a move that is creating uncertainty and impacting European businesses operating in China. This escalation is a key factor contributing to a more challenging business environment, with a notable portion of European companies already experiencing negative effects.
Increased Tariffs Impact European Firms

A quarter of European companies surveyed in China reported already suffering from the US increase in tariffs on Chinese products. Many of these companies are involved in manufacturing in China and subsequently exporting goods globally, making them vulnerable to these trade measures. This situation has led some firms to consider or implement relocation strategies, with six percent having already moved or planning to move operations elsewhere in Asia or Europe to circumvent the penalties.
Trade Tensions Create Business Uncertainty

The ongoing trade tensions between the US and China are now viewed as a significant source of uncertainty for the business landscape in China. This uncertainty persists regardless of whether a trade deal is ultimately reached, according to the European Union Chamber of Commerce in China. These trade tensions are consistently cited by members as detrimental to business operations and outlook.
Broader Concerns Alongside Tariffs

While the trade war is a significant concern for European firms in China, it is not the sole challenge. The Chinese economic slowdown, global economic conditions, and rising labour costs in China are also identified as top concerns by a considerable percentage of surveyed companies. This indicates a complex environment where trade disputes add another layer of risk to existing economic pressures.
Gloomy Outlook for a Level Playing Field

The outlook for European companies regarding a level playing field in China is increasingly pessimistic. Only 45 percent of surveyed firms expressed optimism about their sector's growth prospects over the next two years, a decrease from 62 percent a year prior. Furthermore, half of the companies do not anticipate a level playing field within the next five years or even beyond, suggesting a persistent struggle with unequal treatment and market access barriers.

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What tariff moves by the US and China are reshaping risks?

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