Trump's tough trade talk makes U.S. firms
fear China retribution
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[December 13, 2016]
By Nick Carey and Ginger Gibson
CHICAGO/WASHINGTON (Reuters) - U.S.
President-elect Donald Trump's challenges to China on trade and Taiwan
are rattling American companies who have long benefited from stable
relations between the two countries but now fear retaliation by Beijing
if Trump were to act.
Trump jarred Chinese officials on Sunday by saying the United States did
not necessarily have to stick to its long-standing position that Taiwan
is part of "one China." Beijing expressed "serious concern" about
Four U.S. industry sources who follow China policy closely said they
were unsettled by any suggestion of abandoning the "one China" policy,
which they said had served the business community well for several
The sources, who spoke on condition of anonymity because of the
sensitivity of the issue, stressed the importance of stability for
businesses. They said Beijing could retaliate against U.S. companies
that do business in China if Trump takes his tougher line too far.
"The Chinese are deeply concerned and we hear now from reliable sources
in Beijing who suggest the Chinese government, the Communist Party, are
developing lists of U.S. interests against which they could retaliate,
commercial interests, and obviously one merely has to look at top U.S.
exports to China to get a quick sense of whose heads may be on the
chopping block," said one China trade policy expert who interacts
closely with U.S. business.
The expert pointed out that more than 30 states have over $1 billion in
exports to China and that there is over $500 billion in commercial
engagements by U.S. companies in China. All of that would be at risk if
"That commercial engagement supports American jobs, many American jobs
here in the United States," the expert said.
Another source said there had been "quiet outreach" by the U.S. business
community to Trump's advisers but companies were wary of discussing
their concerns about the China policy publicly for fear of becoming a
target for the president-elect, who has singled out companies such as
Carrier and Boeing.
From Detroit's car makers to Silicon Valley's technology champions,
China is both a critical source of revenue and profits, and a vital link
in global supply chains.
More than four decades after President Richard Nixon upset the status
quo of his time with a surprise visit to Beijing, what's good for
U.S.-China relations is good for General Motors and Starbucks and Apple
and Wal-Mart Stores Inc.
China has hit U.S. goods with retaliatory tariffs in the past when
disputes flared. China in 2011 slapped duties on U.S.-made large cars
and sport utilities as part of a trade dispute.
The stakes are higher now.
More than one-third of the 9.96 million vehicles General Motors Co sold
globally in 2015 were delivered to Chinese customers. Profits from
Chinese operations, including joint ventures, accounted for about 20
percent of GM's global net income of $9.7 billion in 2015. Ford Motor
Co's China JVs represented about 16 percent of its global pre-tax profit
of $9.4 billion in 2015.
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Donald Trump appears at a USA Thank You Tour event at U.S. Bank
Arena in Cincinnati. REUTERS/Mike Segar
U.S. retail giant Wall Mart Stores Inc has 432 stores in China,
while coffee chain Starbucks Corp has 2,500 stores there and
outgoing CEO Howard Schultz told investors China will one day be a
bigger market for the firm than the United States.
Aircraft maker Boeing Co plans to build a "completion" factory in
China for its 737 jets, anticipating the country will need 6,800 new
jetliners worth $1 trillion over the next 20 years.
"The United States and China are in a symbiotic relationship, we are
wed to each other and do best when we grow together," said Susan
Aaronson, a professor at George Washington University who teaches
corruption and good governance.
The total value of U.S. trade with China was $599 billion in 2015,
according to the U.S. Census Bureau, of which $116 billion was
exports to China from U.S. producers, while U.S. companies imported
$483 billion in goods from China.
Alan Deardorff, professor of international economics and public
policy at the University of Michigan, said that if U.S.-China trade
tensions were to reach a boiling point, "the pain would be
widespread and deep” for U.S. businesses.
Trump and his advisers have said the U.S.-China trade deficit
reflects bad trade deals and currency manipulation by the Chinese
government, which they said justifies a tougher response than in the
George Washington University's Aaronson said that while Taiwan is a
sensitive topic, if Trump pushes ahead with trade tariffs that is
far more likely to translate into retaliation against U.S. firms in
"China's leaders need stability and Trump is totally disruptive,"
Aaronson said. "They will need to signal their strength in return."
(Reporting by Nick Carey in Chicago and Ginger Gibson in Washington;
additional reporting by Paul Lienert and Bernie Woodall in Detroit,
Meredith Davis and Tom Polansek in Chicago, Alwyn Scott in Seattle,
Caren Bohan and David Brunnstrom in Washington; editing by Joseph
White and Grant McCool)
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