Customers shop at a Walmart store in Los Angeles County, California, the United States, May 20, 2025. Photo: Xinhua
Many American companies that operate in China are staying put, as half of a dozen business leaders and business groups said in interviews that’s the least risky option, citing the US tariff hikes on China and other manufacturing powerhouses and uncertainty about future US trade moves, POLITICO reported on Sunday.
The report showed the negative impact of the US tariffs on its own businesses, and that by contrast, China’s large consumption market and stable policies have created a favorable environment for businesses to operate in, a Chinese expert said on Monday.
The US administration’s penchant for jacking up tariffs on countries for non-trade-related disputes, combined with the open-ended trade talks with China, are prompting many companies that source components there to stay put “until you kind of understand where this is going,” said Stephen Lamar, the president and CEO of the American Apparel and Footwear Association, which represents businesses like JCrew and Lands’ End. “People don’t want to leave China and end up putting their production in the wrong location,” Lamar said, according to POLITICO.
In their annual survey, the US-China Business Council found that while most US companies operating in China have felt the sting of trade tensions between Washington and Beijing, a majority of companies still plan to expand investments this year, in part in an effort to continue to capitalize on the Chinese market and because they rely on their Chinese operations to remain globally competitive, POLITICO reported.
“None of this stuff is going to be reshored,” said Tidalwave Solution’s Johnson. “The US doesn’t have the ecosystem, the people, the tax incentives or the money” to make a shift away from China financially feasible, Johnson said, per the report.
“The scale of the Chinese market is continuously expanding, with enormous consumption potential that is unique globally. In addition, China’s policies are very stable, and we have always maintained an open and welcoming attitude toward foreign investment, continuously addressing their concerns,” Zhou Mi, a senior research fellow at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times on Monday.
Zhou noted that China also has an environment conducive to knowledge and innovation, providing better conditions for foreign enterprises to explore their own development advantages, enabling them to continuously enhance their technological capabilities and innovate business models in China.
POLITICO also pointed out that the tariff policy is starting to hit consumers. Major US big-box retailers like Target, Walmart and Home Depot reported higher costs from the tariffs in their second-quarter earnings, and the three companies indicated in their calls with investors that prices would continue to rise in their stores heading into the important holiday shopping season.
“The smaller firms that are just buying goods from China aren’t going to get away with this for much longer,” James Zimmerman, former chair of the American Chamber of Commerce in China and a partner in the Beijing office of international law firm Perkins Coie LLP, was quoted by POLITICO as saying. “A lot of suppliers in China are turning to the companies they sell to and saying, ‘My prices are going up, you’ve got to pass this on to the American consumer, otherwise we’re out of business.'”
Zhou said that the US tariff policy has a direct negative impact on consumers and the US economy, significantly increasing costs. A large portion of these increased costs is borne by US entities, which notably heightens their development pressures, including inflationary pressures.
“Even for companies producing in the US, they still need to import raw materials and intermediate goods from other countries. The rising costs further erode their competitive advantages, which is also detrimental to US employment,” the expert said.
The economies of China and the US are both massive in scale, and mutually beneficial and win-win cooperation are essential for businesses. “Currently, China and the US have maintained exchanges and dialogue. We hope to see the US take concrete steps to reduce restrictions on China-US trade, two-way investment, and technological cooperation, creating better conditions for businesses,” Zhou said.