Trump wants to end U.S. reliance on Chinese manufacturing ‘once and for all.’ U.S. firms aren’t complying

September 9, 2020, 10:52 AM UTC

A survey of American businesses in China released on Wednesday found that a majority of U.S. companies in China don’t have plans to move manufacturing out of China and into the U.S., despite President Donald Trump’s recent remarks that doing so was a national priority.

Trump, speaking at a White House press conference on Monday, said he would create “made in America” tax credits, impose tariffs “on companies that desert America to create jobs in China and other countries,” and prohibit federal contracts with companies that outsource to China.

Trump said his administration would “make America into the manufacturing superpower of the world” and “end our reliance on China once and for all.” The comments put a finer point on Trump’s long-standing pledge to oversee a mass re-shoring of U.S. manufacturing currently based in the mainland.

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But according to a survey by the American Chamber of Commerce in Shanghai, which was conducted in June and July, more than 70% of U.S. companies that own or outsource manufacturing in China do not plan to shift production outside China. Just 3.7% said they are shifting some production to the U.S. from China.

Nor are a majority of the 346 surveyed companies planning to move jobs from China to the U.S. In fact, two-thirds of respondents said they planned to maintain or increase the number of staff in China. The one-third of companies that do plan to cut jobs in China are doing so mostly because of the pandemic, AmCham Shanghai president Ker Gibbs told Bloomberg.

While most U.S. companies aren’t planning to relocate manufacturing from China, the pandemic has dampened their investment outlooks for China and their global profitability forecasts. Almost half of respondents expect their 2020 global revenue to be lower than 2019 totals, and 28.6% plan to increase their investment in China, compared with 47.2% in 2019.

Almost 80% of surveyed companies were profitable last year, and for nearly 50% of the firms, revenue growth was higher in China than in the rest of the world, despite the U.S.-China trade dispute and ongoing political tensions between the two countries.

But the feud has led to some pessimism. The share of companies saying that the U.S.-China trade tensions could last indefinitely rose 10 percentage points, from 16.9% in 2019 to 26.9% in 2020. That’s a projection, not a hope, according to Mark Gilbraith, management consulting leader for PricewaterhouseCoopers China, which worked with AmCham on the survey. “U.S. businesses in China would like to see the two countries resolve their outstanding issues quickly and reduce tensions,” he said in a statement.

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