Impact of rare earths impact limited, but critical, for small subset of firms; majority of companies remain committed to China market

 

Beijing, June 6, 2025 – A new Flash Survey from the American Chamber of Commerce in China (AmCham China), conducted between May 23 and 28, reveals that escalating US-China trade tensions – particularly through tariffs – are placing increased pressure on US companies operating in China. The data reflects responses from 112 member companies across diverse sectors and underscores the need for balanced, practical policymaking that protects long-term business interests.

 

A majority of companies report that both US and Chinese tariffs are significantly increasing costs and reducing revenues. Respondents say Chinese tariffs have reduced the competitiveness of US companies in China, and US tariffs have increased costs for US consumers, compounding operational challenges. Meanwhile, 54% of companies in the Tech and R&D sector reported receiving tariff exemptions from the Chinese side, indicating selective relief measures for strategically important sectors.

 

“Tariffs are an added challenge for our member companies at a time when operating in China is already becoming more complex,” said Alvin Liu, Chair of AmCham China. “But the message from this survey is clear: most US companies are not giving up on China. Remaining engaged is a strategic imperative – one that allows companies to stay competitive globally, adapt to shifting policies, and provide valuable on-the-ground insights that inform smarter, more balanced policymaking.”

 

Other Key Findings from the Flash Survey Include:

  • Adaptation, Not Exit: Despite the challenges, most companies are not planning to exit China. Instead, they are localizing operations or shifting some production to third countries. None report shifting production back to the US.
  • Rare Earths: While just a small number of companies (primarily in the Tech and R&D, and Industrial sectors) are affected by rare earth export controls, the potential impact is severe: 75% say their stock would run out within three months. Some Chinese suppliers of US companies have recently received six-month export licenses, but uncertainty remains amid a large backlog of license applications.
  • Tax Policy Awareness: Amid reports that the existing US-China tax treaty might be revoked, only about half of respondents say they are aware about a possible cancellation, though 81% of those familiar with it expect a negative impact on their business and support continued measures taken to preserve the treaty.
  • Geopolitical Pressures: Companies report pressure from both governments: US measures center around export controls and reshoring incentives, while Chinese pressures are seen more in negative media coverage and export restrictions.

 

Caution on Data Interpretation

 

While rare earths attract significant media and policymaker attention, they only affect a niche group of respondents. Overemphasis could misrepresent the broader business sentiment, which leans toward adaptation, not decoupling. Tariffs, on the other hand, are an additional new challenge for a majority of member companies to deal with in an already challenging environment.

 

AmCham China encourages all stakeholders to interpret these findings with care, recognizing them as a reflection of real-time business challenges and adaptations. We hope this data can contribute to constructive dialogue and practical policymaking that supports the long-term success of businesses operating across both markets.

 

About AmCham China
The American Chamber of Commerce in China’s mission is to help American companies succeed in China through advocacy, networking, insights, and business support services. In addition to our headquarters in Beijing, AmCham China serves Tianjin, Central China, Northeast China, and Southwest China through our Chapters in Tianjin, Dalian, Shenyang, Wuhan, and Chengdu. Across those locations, AmCham China has more than 30 working groups, and holds more than 300 events each year.

 

For more information, please contact:
Mark Dreyer, Senior Director, Marketing & Communications, AmCham China
mdreyer@amchamchina.org