European companies operating in China are increasingly choosing to reshuffle supply chains rather than shoulder the pain from higher tariffs.
According to a survey by the European Union Chamber of Commerce in China, recent moves by its members have “changed drastically” from the start of the year. Back then, businesses using U.S.-sourced inputs were more likely to pass on higher costs, but as tariffs rise further and the trade war drags on, companies are instead trying to circumvent direct U.S.-China trade.
About one in four respondents import supplies or goods from the U.S. that are affected by the tariffs, and 19% of total respondents say prices have gone up.
The survey shows more European companies are reacting by leveraging their own global operations or shifting supply chains across other markets. A few firms are increasing their investment into China, using onshoring to avoid tariffs altogether. The report’s “most concerning finding” is that 15% of respondents have delayed investment or expansion decisions.