US Firms Cut China Investments, Eye ASEAN, India for Manufacturing

• USCBC survey shows US investment in China drops to a record low.
• Nearly 70% of firms hit by tariffs; confidence in growth declining.
• Firms shift supply chains, explore ASEAN markets like Thailand.

The World Economic Forum (WEF) has disclosed the results of the 2025 yearly survey conducted by the US-China Business Council (USCBC), emphasizing escalating worries among US firms doing business in China about the surging tariffs and heightened trade instability.

The USCBC survey indicates that customs duties have raised to the second most pressing issue for US companies, moving up from eighth position in 2024. Almost 70% of businesses have been directly influenced by tariffs, while 88% have felt the effects of worsening US-China relations.

"American companies have drastically reduced investments in China to an all-time low, as trade tensions and tariffs continue to impact economic relations between the two largest economies in the world. Only 48% of US companies plan to invest in China this year, a significant drop from 80% in 2024," the report stated.

The survey indicated that trust in China's economic growth potential has been gradually decreasing, with minimal optimism for bettering US-China relations. The USCBC, an impartial, non-profit entity representing more than 270 major American companies operating in China, carried out the survey from March to May 2025, during a time when former US President Donald Trump reignited the trade dispute between the US and China by attempting to change US trade policies.

"The steep rise in tariffs after 2 April, coupled with prolonged negotiations, has shaken business confidence. Investment plans have been disrupted, and broader relations have deteriorated," the report continued.

The report indicated that rising tensions are prompting companies to reevaluate their investment approaches in China because of ongoing economic challenges and political instability in recent years. Consequently, numerous US firms are changing their supply chains and cutting back on new investments in China in the short term.

The tariffs have also had a substantial financial effect. The survey revealed that over one-third of businesses have experienced lost sales because of US tariffs, while fifty percent of the participants indicated that Chinese clients have turned to suppliers from outside the US to evade uncertainty.

Also Read: US, China Extend Trade Truce to Avert Tariff Hike

The USCBC report indicates that the majority of surveyed companies remain profitable, but less than half express optimism for the future due to worries about tariffs and uncertainties related to US policy. The USCBC survey also underscored additional elements influencing the business climate for US firms in China, such as heightened rivalry with Chinese businesses, US export restrictions, China's industrial regulations, and domestic restructuring initiatives, all of which create obstacles to market entry.

Despite ongoing economic challenges and uncertainties, the USCBC survey shows that US firms are unlikely to leave the Chinese market because of the expanding middle class, along with technological advancements and new strategies vital for sustaining China's global competitiveness, stated Sean Stein, President of USCBC.

Even though the Chinese market is too vast to overlook, confidence won’t recover unless there’s a notable decrease in tariffs and enhanced market access. Consequently, US investors will look for new options, and Thailand, being part of the ASEAN region, could gain from this chance if it can draw investment through its significant potential.