US Firms Freeze Investments in China Amid Rising Trade Tensions

US companies are freezing investments in China due to worsening trade ties and retaliatory tariffs, with a record low of 49% planning to invest in 2025, down from 80% last year. Companies are in a "wait-and-see mode," citing uncertainty in trade policy as their top concern. A record 27% of companies plan to move operations out of China, while 75% cited tariffs as their top cost concern.

US companies are freezing investments in China due to worsening trade ties and retaliatory tariffs, with a record low of 49% planning to invest in 2025, down from 80% last year. Companies are in a "wait-and-see mode," citing uncertainty in trade policy as their top concern. A record 27% of companies plan to move operations out of China, while 75% cited tariffs as their top cost concern [1].

The U.S.-China Business Council (USCBC) survey, conducted between March and May, found that 51% of the 130 member companies do not have new investment plans in China for this year, a significant increase from previous years. This trend is driven by escalating geopolitical tensions and the uncertainty surrounding the U.S. trade policy with China [1].

The survey also highlights that 40% of companies reported negative effects from U.S. export control measures, with many experiencing lost sales, severed customer relationships, and reputational damage. The U.S. government has banned exports to China of high-tech products, such as advanced chips, citing national security concerns [1].

Moreover, the survey found that 82% of U.S. companies reported profits in 2024, but fewer than half are optimistic about the future in China, reflecting concerns over tariffs, deflation, and policy uncertainty. This cautious outlook is further exacerbated by the fact that a record high number of American businesses plan to relocate their operations outside of China [1].

Australia, a longstanding U.S. security partner, is seeking to sidestep U.S.-China tensions to focus on business and trade opportunities. Australian Prime Minister Anthony Albanese visited China this week, emphasizing the importance of the relationship for Australian jobs and the economy. The leaders avoided discussing sensitive security-related issues, such as the potential forced sale of the port of Darwin by its Chinese owner [2].

The semiconductor industry, a key driver of global technological advancement, is also feeling the impact of geopolitical tensions. ASML Holding, the global leader in lithography systems, reported strong Q3 2025 performance but expressed caution for 2026 due to increasing macroeconomic and geopolitical risks. The company's CEO, Christophe Fouquet, warned about the potential impact of new U.S. tariffs on EU chip equipment and ongoing U.S.-China trade disputes [3].

In conclusion, the current geopolitical climate and trade tensions between the U.S. and China are significantly impacting U.S. companies' investment plans and operations in China. As the trade war continues to evolve, companies are adopting a cautious approach, awaiting clearer policy directions.

References:
[1] https://abcnews.go.com/US/wireStory/faced-geopolitics-trade-war-us-companies-china-report-123808800
[2] https://www.detroitnews.com/story/news/world/2025/07/15/australia-sidesteps-u-s-tensions-to-seek-closer-china-trade-ties/85206022007/
[3] https://www.ainvest.com/news/asml-q3-2025-navigating-growth-geopolitical-crosscurrents-2507/