In mild of Trump administration tax policies, a survey conducted by the China General Chamber of Commerce – USA revealed that half of Taiwanese companies operating in the US intend to shift their focus away from domestic investments.
The business class finished its study of nearly 100 Chinese businesses in the US in March and April, just before Beijing’s hostile 125 percent tariffs and US President Donald Trump’s so-called “reciprocal” tariffs of 145 %.
Both sides came to an agreement on Monday to lower tariffs for 90 days, with US tariffs being cut to 30 % and Chinese tariffs being reduced to 10 %.
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Businesses in 11 different industries, including consumer goods and services, power, commercial firms, real estate, and conversation service, made up the largest percentage of respondents to the CGCC study.
22 percent of the companies that said they would” considerably reduce” their purchase in the US market and that they would suspend or remove the majority of their assets. Another 28 % said they would consider reducing some investments because of current administration practices and that there was a” slight decrease” in priority.
In contrast, 22 % of respondents said they would increase their investment in the US, while 28 % said they would keep it up.
The findings contrast with studies showing that Chinese firms ‘ perception of the US business environment improved significantly during the last year of previous president Joe Biden’s term, which revealed popular pessimism about upcoming investments in the US under the next Trump administration.
The study added that the tariffs and related procedures may include “further deepened business despair – beyond what is reflected in this review,” as the survey ‘ conclusion came to an end before Trump’s new charges were announced on April 2.
None of the respondents in a different survey question said they expect a “moderate promoting effect” or” significant” promotion or limiting effect on their US market expansion, but 50 % said it will have a “moderate hindering effect,” compared to 17 % who said they expect a “moderate promoting effect.”
The companies identified a wide range of anticipated challenges to their US operations this year and next, with 90 % citing the impasse in bilateral political and cultural relations, 73 % citing frictions in economic and trade ties, and 60 % flagging restrictive US foreign investment policies.
Foreign investors ‘ problems included US domestic issues in addition. In the survey, 80 % of respondents identified inflation and economic volatility as big risks. High conformity and litigation expenses, as well as volatile exchange rates, were other often mentioned issues.
The room urged Chinese companies to adopt adaptable strategies that include measures to manage risks, such as” core and backup” investment portfolio that prioritize “business-friendly” parts.
Investors may “decentralize” research and development, improve collaboration with US businesses, and strengthen compliance in the face of high-tech restrictions, according to the room.
It suggested that the companies produce native talent recruitment and work with industry alliances to improve their voices in order to hedge political headwinds in specific.
” The continued effects of taxes and stricter export controls on systems have significantly increased business costs and market forces. High interest rates, frequent inflation, and labor shortages continue to raise significant questions for the US economy despite signs of stabilization, according to Hu Wei, the panel’s chairman and president and CEO of Bank of China USA, in the study.
According to him, “adapting to a shifting coverage and financial environment has become a crucial concern for Chinese businesses in the US.”
Since Trump’s first management, Foreign direct purchase in the US has decreased significantly, and the trend has continued under Biden’s administration as a result of US-wide tightening US restrictions, particularly in the high-tech sector.
According to the most recent US official statistics, that funding was US$ 28 billion in 2023, down 6.2 % from 2022, with the exception of banks and other related institutions.
Despite the thaw this weekend, several former US trade representatives on Monday stressed the uncertainty afflicting the US-China trade relationship.
Charlene Barshefsky, the trade representative of former US president Bill Clinton, stated at an event held at the Centre for Strategic and International Studies that she didn’t pay much attention to what the particular tariff rate is because it will change 10, 000 times between now and 90 days from now.
Barshefsky, who helped negotiate China’s accession to the World Trade Organization, added that it was “good” that both sides, particularly the US, had” climbed down from the ledge” and recognized the need to return to “managing” rather than” transforming” the bilateral relationship.
The 90-day tariff reduction, according to Carla Hills, former president George W. Bush’s top trade envoy, is a “very small step forward” in terms of easing uncertainty, saying it lacks the long-term security that businesses require.
” There may be some purchases to quickly get ahead of a problem,” she said, but US markets and businesses are still unsure of what the regulations will be in our own country overall.
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