China Warns US Corporations: You Are About To Become Victims Of A Trade War

  • Written by Zero Hedge
  • Published in Economics

Now that China has released details on its planned retaliation to President Trump's Section 301 tariffs - a list that contains, predictably, agricultural goods like soybeans, orange juice and beef as well as energy products like crude oil (though surprisingly not yet aircraft, though sanctions could be imposed in the next round) - we get to watch as US corporations who will be negatively impacted by the tariffs ratchet up their lobbying of the Trump administration (that is, if they haven't already given up) practically beginning the president not to let tensions escalate much further.

Foxconn

Of course, the Chinese aren't stupid. They know that one way to pressure Trump into backing off would be aggressively lobby US businesses with threats - both veiled and obvious - that their businesses could come to harm, or perhaps ruin, if the conflict escalates. Already, the Wall Street Journal has published a story about China's efforts to browbeat American businesses, recounting a meeting between a group of executives and Chinese Vice President Wang Qishan that reportedly took place in late March.

When a group of American executives and other global corporate chieftains met with Chinese Vice President Wang Qishan in late March, they received a stern message about the simmering U.S.-China trade conflict: If tensions escalate, buckle up.

"The message was pretty clear," said a person who attended. "A lot of companies would become victims in a U.S.-China trade war."

And some companies say they're already experiencing problems with the customs process as US goods pile up at Chinese ports.

Already, some U.S. companies are facing increased regulatory scrutiny in China, according to Jacob Parker, vice president of China operations at the U.S.-China Business Council. For instance, he said, it takes longer for their products to clear Chinese customs; in other instances, Chinese regulators are putting advertisement slogans by U.S. firms under review. Some automobiles and farm products such as pork from the U.S. have piled up at ports.

"Maintaining a low profile in the China market and ensuring that you’re completely compliant are more important now than in the past," Mr. Parker said.

Others, including Foxconn, a Taiwanese technology company that is best known for assembling Apple's iPhones, have begun reviewing their supply chains.

While multinationals assess the potential impact from the escalation of trade tensions, makers of consumer electronics have been canvassing suppliers and, in the case of at least two personal-computer makers, inquiring about shifting some of production in China to the U.S.

Foxconn Technology Group of Taiwan, the world’s largest contract manufacturer of electronics and known for assembling Apple Inc.’s smartphones in China, conducted a review of its supply chain, said a person familiar with the matter. The review, which assessed the proficiency of Chinese suppliers, could be used to assess the impact of potential tariffs,...

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