U.S.-China trade war escalation: Foreign companies face potential burden of double taxation
Rewritten Article:
Struggles of Foreign Companies in China's Market:
Here's a sneak peek into the rough journey foreign companies are facing in China's bustling market. Heiwai Tang, director of the Asia Global Institute at the University of Hong Kong, put it simply, "Foreign firms are getting hit twice. If they import goods, they pay Chinese tariffs. When they export them back to the U.S., they pay American tariffs."
Foreign companies account for a whopping 30% of China's total trade volume, contributing $980 billion to exports and $820 billion to imports in 2024. Last year, these foreign-invested enterprises accounted for 29.6% of the total trade volume in value terms.
Michael Hart, president of the American Chamber of Commerce, emphasized that there are foreign companies in China, not just American ones, that rely on American products. As these companies are affected by the tariffs, Beijing is contemplating exemptions for certain sectors. Interestingly, Beijing has already offered some exemptions on tariffs for companies importing components and raw materials for re-exported goods.
One such company, Velong Enterprises, has a different story to tell. Jacob Rothman, executive director of Velong Enterprises, which produces kitchenware and home goods in China, pointed out that China's tariff exemptions apply only when a company exports a finished product back to the U.S., not for shipments to other countries. Unfortunately, Velong Enterprises ends up paying "double tariffs" on goods made using plastic from the U.S.
These "mutual" tariffs, imposed by U.S. President Donald Trump, came into effect on April 9. Despite initially suspending the tariffs' implementation for more than 75 countries that hadn't retaliated against the U.S., China was not part of this suspension. The rate for China was first 34%, but it was later increased to 125%. Taking into account previously imposed tariffs, the effective rate is a hefty 145%, as clarified by the White House. In response, Beijing also raised tariffs on the U.S. to 125% starting April 12.
On April 22, Donald Trump hinted at the possibility of striking a trade deal with China. According to a source from the Wall Street Journal, tariffs on Chinese goods could be reduced to around 50-65%. However, specific tariff changes will likely depend on certain factors such as the threats Chinese goods pose to U.S. national security and their strategic importance to U.S. interests.
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Tags:- #Tariffs- #USA- #China- #Business
- Foreign firms, such as those in the American Chamber of Commerce, are confronting dual tariffs when importing goods to China and subsequently exporting them to the U.S.
- The tariffs imposed on foreign companies have prompted Beijing to consider exemptions for specific sectors, with previous exemptions provided for companies importing components and raw materials for re-exported goods.
- Companies like Velong Enterprises, which manufacture kitchenware and home goods in China, are subject to double tariffs due to the sourcing of certain materials from the U.S.
- In the ongoing trade tensions, the tariff rates between the U.S. and China have escalated from an initial 34% to a substantial 145%, as a result of mutual tariffs imposed by both countries.
- The general-news landscape is closely monitoring trade negotiations between the U.S. and China, with potential reductions in tariffs on Chinese goods to around 50-65% being discussed, subject to factors such as national security interests and strategic importance.
