Sorry US firms in China. Xi jinping hits back

Copyright © HT Digital Streams Limit all rights reserved. The Economist 5 min read April 16, 2025, 07:27 AM ist Trump tariffs hit US firms in China, while Beijing has retaliation, which has threatened decades of trade ties. (Illustration: Economist) Summary of Apple and Boeing to Nike and Starbucks, there is a lot of money at stake for decades. They insisted that the country be opened to US banks, aircraft and fast food chains. Boeing, an American aircraft manufacturer, for example, began receiving orders from China just after Richard Nixon visited the country in 1972. Now many US managers in China believe that they see that their government dissolves much of the work. Donald Trump’s heavy use of rates makes their supply chains untenable. Retention by the Chinese government threatens to relax years of commercial success. On April 15, China’s aviation regulator told airlines to stop delivering Boeing aircraft, according to Bloomberg, a news agency. The symbolism of the move will not be lost to American bosses in Shanghai or Beijing. US firms in China are still trying to grasp what the future will look like. US rates on Chinese imports stand at 145%. On April 11, the White House releases on consumer electronics announced, to the great relief from companies such as Apple. Since then, Mr. Trump said it was temporary, valid to the result of an investigation into semiconductors, electronics and pharmaceutical products. This is likely to result in high rates on products that use chips, such as telephones. China matched America’s increases, with rates of about 125%, but recently said it would no longer respond to new rates because the US import market, given much higher prices, has already disappeared. At the same time, Chinese regulators have launched investigations and added US businesses to lists that will harm their operations in the country. Companies such as Boeing can quickly expect declining orders or cancellations. An American executive describes the trade war in one word: “destruction”. Mr. Trump cites a trade deficit with China of about $ 300 billion in 2024 as one justification for rates. American bosses in China consider things different. Income in 2024 for US listed businesses reporting Chinese sales was about the same amount. Apple, Nike and Starbucks are ubiquitous; Tesla, a manufacturer of electric vehicles, sold about two fifths of its cars in China in the first three months of this year. Their local operations often employ tens of thousands of many competent workers. By comparison, Chinese businesses in America were much less successful, which brought only $ 50 billion in turnover last year. It is a rare event to see a Chinese consumer brand in the streets of an American city. For US drivers, the operation in China has just become much more challenging. Over the past five years, many investments have reduced (see map), driven by unfriendly policies and low interest rates. In the future, it will be US policies that impede investment. Look at the full image map: The economist Most US firms with complicated supply chains are still achieving the impact of the pandemic, during which many have tried to limit the total dependence on Chinese manufacturing by drawing up in other countries in the region. This partial diversification can work against US firms as the trade war moves in. For example, Vietnam suggested that the re -account of Chinese goods stop in exchange for lowering rates, according to Reuters, a news agency. This means that US firms that work between the two countries can have even higher rates. American bosses will also have to face the wrath of the Chinese state. Since 2019, regulators have developed a sophisticated legal framework to strike back against companies and countries. This includes sanctions for the following sanctions from other countries, export restrictions and an ‘unreliable entities list’ (UEL), which, when a company is added, can prevent its staff from entering the country and hindering it with China. According to an article by Evan S. co -iros of Georgetown University and Andrew Polk van Trivium, a consultant firm, these three mechanisms were used 15 times in 2023, but 115 times last year. In the first two and a half months of 2025, only additions to the Uel and export control were deployed about 60 times. New forms of retaliation are becoming clearer. On April 8, a non -official list of six measures on Chinese social media began to spread. Some are relatively simple, and indicate ban on the import of US poultry and soybeans, as well as the suspension of all discussions on the policing of Fentanyl trade. Another one suggested to stop importing US films. The list also contains a suppression of intellectual property in US possession (IP) and professional services, such as law firms. The list was written by two well -linked bloggers. Two days later, the film regulator announced that it will reduce the number of US films it allows in China, suggesting that the posts are based on reliable information. The list could also bring more clarity to an announcement made on April 4 about a Chinese investigation into DuPont, an American chemical group. DuPont has been clashing with China for years about IP issues. The investigation into the company claims unspecified monopolistic practices, which results in some analysts believing that the investigation may be an attack on his IP in China. Multinational businesses have previously sought IP protection as a prerequisite to invest in China. Any sign that these promises will be rolled back will be devastating for all foreign firms, not just American, says a company adviser. In the meantime, an attack on US services still has to fully realize. Such measures can damage the ability of other US firms to operate. Law firms, banks, advisory firms and accountants are a backbone for trade. China has made it difficult for some of these services to operate. For example, corporate investigations have become riskier as regulators have tightened rules related to national security and the types of information that can be disclosed. Many law firms have already scaled back scaled or closed offices. If this pressure is increased, says one lawyer in Beijing, the ability to deal with Chinese businesses will be hindered. In the past, US law firms may have been supported by their government if they face such challenges. But Mr. Trump has launched a suppression of law firms in America that has investigated him in the past. He is unlikely to be sympathetic to their situation in China. The Chinese government will have to tread carefully because it punishes the US firms. To injure Apple or Tesla will inevitably hit the local manufacturing capacity and lead to dismissal. Other foreign firms could possibly be thrown by sins in American peers. It may also be the efforts of the Communist Party to attract foreign investment and keep the private sector going. But there are also clear benefits for Chinese firms. Some US bosses fear a setback against their consumer products, powered by the Chinese government or by ordinary consumers. Huawei, a local technical giant, could possibly earn on Apple’s costs. In this sense, the trade war can be a gift to China’s leaders. Local consumers worship American culture and American goods; Many have ignored the state’s efforts to promote local brands. The anger that Mr. Trump to China, the Communist Party’s task of purifying the country of American brands and businesses will make easier. Catch all the business news, market news, news reports and latest news updates on Live Mint. Download the Mint News app to get daily market updates. More Topics #China #United State Mint Specials