Trump’s tariffs seen cutting into China sales of US companies, survey finds

An annual survey by the American Chamber of Commerce in Shanghai reveals that nearly two-thirds of U.S. companies operating in China anticipate reduced 2025 revenues due to ongoing U.S. and Chinese tariffs, with manufacturers being the most severely impacted. The survey of 254 firms underscores significant operational challenges and strategic uncertainty for these businesses, identifying U.S.-China tensions as their top concern for the next three to five years amid persistent trade disputes and unresolved legal challenges to U.S. import taxes.

Analysis

A recent survey by the American Chamber of Commerce in Shanghai provides quantitative evidence of the negative impact of U.S.-China tariffs on American businesses operating in the region. The survey, conducted among 254 companies from May to June, reveals that nearly two-thirds anticipate a reduction in their 2025 China-based revenues. The manufacturing sector is disproportionately affected, with close to 75% of respondents forecasting a revenue decline due to the U.S. 30% import tax and China's 10% retaliatory tariffs. This contrasts with approximately one-third of firms, primarily in non-trade-exposed sectors like banking, that expect no impact. The primary source of this pressure is the persistent uncertainty surrounding trade negotiations and the unresolved legal status of the U.S. tariffs, which remain in place pending a Supreme Court appeal despite being ruled illegal by lower courts. Consequently, U.S.-China tensions are now cited as the top challenge for the next three to five years, signaling that affected companies view these headwinds as a structural, rather than a transitory, risk to their operations and financial performance.

Key Decisions for Investors

• Investors should re-evaluate exposure to U.S. companies with significant manufacturing operations or supply chains in China, as the survey data points to a high probability of negative revenue guidance and margin compression for 2025.
• Consider underweighting U.S. manufacturing sectors that are highly dependent on Chinese production for the U.S. market, while recognizing that U.S. firms in service-oriented industries like banking within China appear more insulated from these direct tariff impacts.
• Closely monitor developments in U.S.-China trade talks and the pending U.S. Supreme Court appeal on tariff legality, as any definitive ruling or policy shift represents a significant potential catalyst for firms with heavy exposure to bilateral trade.