European exporters in China shift trade to avoid US tariffs

BEIJING (AP) – European companies that export from China are changing the global flow of their goods to avoid higher American tariffs, a business group said yesterday, in a sign of the spreading impact of the US-Chinese trade war.

Tariff hikes are “hitting immediately the bottom line” of companies that rely on the flow of components and finished goods across countries, said Mats Harborn, President of the European Union Chamber of Commerce in China.

Companies are “scrambling to readjust supply chains” so goods bound for the United States don’t pass through China, Harborn said at a news conference. He said one has shifted final assembly of goods from China to a newly created American unit.

The Trump administration’s 25 per cent tariffs on USD34 billion of medical equipment, electronics and other goods from China, imposed in a dispute over technology policy, apply to exports made by US or European companies as well as Chinese suppliers.

European governments have criticised President Donald Trump’s approach but have resisted Chinese efforts to recruit them as allies in their dispute.

President of the European Union Chamber of Commerce in China, Mats Harborn speaks during the release of a report in Beijing. – AP

Tariffs are a “dangerous and very blunt instrument” to settle disputes, Harborn said.

“We share the concerns expressed by the American side,” he said. “But there are better and less risky ways to deal with these problems.”

On Monday, Chinese and German companies including BASF and Volkswagen signed business deals worth 20 billion euros (USD23.6 billion) during a visit to Berlin by China’s number two leader, Premier Li Keqiang.

Harborn said a European supplier of environmental technology believed it might have been awarded a Chinese government contract ahead of an American competitor due to its non-US status.

Also on Monday, German automaker BMW AG said it would raise prices on US-built SUVs exported China due to higher tariffs.

Beijing’s increases include an additional 25 per cent tariff on cars imported from the United States, raising the total charge to 40 per cent.

BMW exports SUVs from a factory in Spartanburg, South Carolina, that employs 10,000 people.