The Trade War Between China and the United States Is Impacting Businesses

Despite affecting global businesses, the US-China trade war could actually bring benefits to some

The Trade War Between China and US Is Impacting Businesses

Business leaders everywhere are generally worried by trade conflicts, but the ones from China and the United States are particularly concerned about the way the trade war between their two countries is affecting their businesses.

While 44% of North American CEOs are concerned about the trade conflicts, the ones in China are rethinking their focus on the United States with 17% of Chinese CEOs recognizing US as the most important foreign market for their company’s growth this year, compared to 59% last year.

A report found that after previously spending heavily on American real estate, transportation and infrastructure, Chinese investment has presently disappeared from these sectors. Meanwhile, economies from France, Spain, Germany, and Sweden saw an increase of investment from China. Canada did too, seeing more Chinese investment than the United States in 2018.

Companies from Europe and Canada, as well as from Mexico and Japan are predicted to see more earnings from export orders if the Chinese and American trade war continues, according to a study by the United Nations.

However, while some European countries could benefit from this trade war, some have actually started to already be affected by it. For example, Germany’s BMW export of high-end vehicles to China from their US plants took a hit due to the Chinese tariffs of American-made cars.

Also, last year tariffs on American soybeans forced Chinese importers to turn to Brazil instead, but Brazilian farmers are having a hard time capitalizing off of this because they are reluctant to make huge investments that could turn out unprofitable if the trade war ends.

Meanwhile, the United States plans to raise tariffs to 25% unless there’s a deal by 1st of March, which, as a consequence will strike smaller and poorer countries that will struggle to deal with the external shocks. East Asian producers will also be hit, while other countries such as Australia, Brazil, India, the Philippines and Vietnam would benefit from this, according to the report.