【By Observer News, Liu Bai】"Trump tried to attract companies to leave China, but it backfired," the U.S. "Politico" website wrote on August 31, pointing out that Trump had promised during his campaign that his trade policies would cause a large-scale return of manufacturing to the United States from China. However, so far, many American companies operating in China have not left. From the perspective of American companies, keeping their operations in China is a better choice than moving them back to the United States, given Trump's unpredictable trade policies.

Six business leaders and trade groups admitted in interviews that "this is the least risky option." They said that Trump's comprehensive tariff increases not only targeted China, but also most other major manufacturing countries in the world, and there is uncertainty about Trump's future trade measures.

A survey conducted by the U.S.-China Business Council (USCBC) in July also reflected this. The survey found that although the number of companies reconsidering their investment strategies has increased, about two-thirds of American companies operating in China plan to maintain their investments in China.

"We are in a dilemma and no longer have the luxury of waiting," said Jaden Kim, founder of the American game company Starlux Games. "We can only pay (tariffs), which is part of the dilemma. Another part is how much price increases consumers are willing to tolerate."

This squeeze has brought survival crises for many American small and medium-sized retailers. Although large retailers have the ability to negotiate lower prices with suppliers and bear part of the tariff costs, this approach is unsustainable for more specialized companies.

On August 12, people shopped in a supermarket in Los Angeles, California, USA. American consumers have already felt the pressure of tariffs. IC Photo

Many American companies that rely on Chinese goods hope that the trade situation will become clearer in the coming months. However, the report states that although the U.S. and China reached an agreement to delay the imposition of additional tariffs, the three rounds of negotiations between the two sides this summer have made little progress. The U.S. government has also pressured other countries to cut off the "transit" channels for Chinese products, including imposing a 40% tariff on transit products.

The U.S. Court of Appeals ruled on the 29th that most of Trump's global tariff policies under the International Emergency Economic Powers Act (IEEPA) were illegal. This could lead to a legal battle at the Supreme Court later this year, further increasing uncertainty.

During Trump's second term, the U.S. government's "reciprocal tariffs" have also affected manufacturing bases such as Vietnam, Cambodia, and Indonesia, making their tariff levels close to those of China. After Trump decided to raise tariffs to punish Indian companies that continued to buy Russian oil, India now faces tariffs as high as 50%.

Stephen Lamar, president and CEO of the Association of American Apparel and Footwear, said that Trump's frequent tariff hikes over non-trade disputes, along with endless negotiations between the U.S. and China, have forced many enterprises relying on Chinese components to choose to remain in China. "Everyone doesn't want to leave China, in case they move their production capacity to the wrong place."

For companies that rely on products from China and its neighboring countries, Trump's policies have dealt a heavy blow.

"The 'China + 1' strategy has failed; American mid-to-low-end companies either exit the market or go bankrupt," said Cameron Johnson, senior partner at Tidalwave Solutions, a Shanghai-based supply chain consulting company.

American consumers have also started to feel the impact.

Retail giants such as Target, Walmart, and Home Depot disclosed in their second-quarter earnings reports that tariffs have increased their costs. For example, the price of Barbie dolls sold by Target has risen by 42.9% since April.

All three companies stated at investor meetings that, with the important holiday shopping season approaching, product prices will continue to rise.

"We may have gotten a wrong impression because things haven't been that bad so far. But now it's August, eight months have passed, and 'the tariff impact seems not significant,' " said Joe Feldman, retail analyst at Telsey Consulting Group. "But I'm worried that the impact is about to come, and many savvy retail investors share the same concern."

Some American companies that cannot pass on rising costs to consumers have fallen into difficulty. Since June, American home goods retailer At Home Group and toy and stationery supplier IG Design Group have both filed for bankruptcy, blaming the decline in revenue on tariffs.

They are not alone.

"In recent months, the number of American companies relying on Chinese suppliers that have gone bankrupt has increased exponentially, and our restructuring business orders are full," said Gobbs, former president of the U.S.-China Chamber of Commerce and partner at consulting firm Foresight Restructuring. "They point the finger at tariffs and uncertainty."

"Businesses have been paralyzed," Gobbs said. "The problem is not just the tariffs themselves, but the uncertainty, not knowing whether tariffs will increase or decrease, which is causing businesses to stall."

An annual survey by the U.S.-China Business Council found that although most American companies operating in China felt the pressure of U.S.-China tensions, most companies still plan to expand their investments in China this year, partly to continue capturing the opportunities of the Chinese market, and partly to rely on their Chinese business to maintain global competitiveness.

"These industries won't return to the U.S.," said Johnson of Tidalwave Solutions. "The U.S. does not have the corresponding industrial ecosystem, labor force, tax incentives, or capital, which makes it economically unfeasible for companies to move away from China."

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