China outlook murky for executives as companies plan for Trump tariff blitz

Days before the US presidential election, surveyed executives at companies operating in China said they could relocate if tariffs go up

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Tariffs on Chinese goods pledged by former president Donald Trump during his re-election campaign have executives concerned about their exposure. Photo: AFP

Published: 8:00pm, 31 Oct 2024

More companies operating in China are considering closing factories and exiting the country, according to a survey of corporate executives – a strategic shift in anticipation of the higher tariffs applied to Chinese goods if former United States president Donald Trump is elected to a new term next week.

In particular, manufacturing exporters showed greater intent to shift supply chains and expressed a more subdued outlook for the future of their businesses in the survey, released by financial services firm UBS on Thursday.

Sentiment has worsened as uncertainty over US-China trade relations compounds other issues in the Chinese economy, and the country has struggled to lure new investment and retain extant capital.

More than 90 per cent of the 419 CFOs polled anticipated additional tariffs in the event of a Trump re-election. The UBS survey was conducted between August and September.

While most expect tariffs to stay below 60 per cent, companies are already strategising, the survey report said, with many planning to expand into other markets, lower export prices and relocate supply chains to mitigate risks.

During his campaign, Trump has pledged to impose up to 20 per cent tariffs on all imports and 60 per cent on those from China – presumably on top of the 25 per cent rate put in place on some goods during his first term.