On Wednesday (the 10th), local time, the U.S.-China Trade Council (USCBC) released its 2026 China Business Environment Survey report. The survey, conducted among 175 companies, revealed that the export control, sanctions, and tariffs imposed by the Trump administration on China have harmed the interests of American companies in China, and have not achieved the policy objectives of blocking key technologies and revitalizing the American manufacturing industry.
"Hong Kong's "Nanhu Early Morning Post" reports that "American businesses are paying the price for Trump Administration's trade measures toward China."
The research also indicates that despite the many negative effects caused by tariff shocks, policy uncertainties, and ongoing tensions in bilateral relations, China remains a crucial component in the global operations of American companies.
The report summarizes that "up to 95% of the surveyed companies stated that their operations in China are of significant importance to maintaining their global competitiveness."
Data changes are clearly visible: The proportion of surveyed enterprises that consider China to be “very important” or “important” for their global competitiveness has risen to 80%, compared to 66% in 2025.
Report screenshots
The report suggests that this significant increase in data reflects “China’s status as a manufacturing powerhouse, a consumer market, and a testing ground for new technologies and cutting-edge enterprises”. Additionally, “an efficient integrated supply chain ecosystem and increasingly strong global R&D capabilities” further enhance these advantages.
"Without a presence in the Chinese market, one cannot talk about participating in global competition," USCBC President Sean Stein (Sean Stein) told *The Straits Times*. "US businesses are operating in China now not just to compete for the Chinese market, but also to gain competitive power globally."
The report also states, "At the same time, American companies have noticed that Chinese companies are making a name for themselves in international markets, thanks to their skills and technology developed in competitive domestic markets. Therefore, we believe that in the highly competitive global market, companies must combine their expertise and technology with the speed and efficiency of China's industrial ecosystem in order to maintain their competitiveness."
USCBC has over 270 US member businesses operating in China. A report released on Wednesday, targeting 175 member businesses, was conducted between February and March of this year.
During this period, Sino-US commercial relations continued to evolve: starting from the end of 2025, with progress made in a series of trade negotiations, the ongoing escalating trade confrontation between China and the United States came to an end with the Busan Trade Truce Agreement. As a result, American companies operating in China entered a period of relatively stable bilateral relations. In February of this year, the U.S. Supreme Court ruled that Trump’s so-called “reciprocal tariffs” were illegal, further solidifying this stable situation.
The report indicates that for American companies, “China-US relations” remain the “most significant challenge” they face in expanding their presence in the Chinese market. Other factors, such as tariffs, export controls, sanctions, and investment scrutiny, follow closely behind this challenge.
According to the report, more than 72% of the surveyed companies have been affected by the mutual imposition of tariffs between the two countries. Nearly 40% of the affected companies have seen a decline in their revenue due to the U.S. tariffs.
Research findings indicate that these losses did not drive U.S. companies to relocate production back to their home countries. Only 14% of the surveyed companies increased their production capacity in the U.S., while 36% chose to increase production in third-party countries. Additionally, 12% continued to increase production in China.
These impacts are particularly common in the industrial and manufacturing sectors. More than 90% of the companies surveyed reported being affected.
While the tariffs imposed by President Trump's "Liberation Day" tax regime may have narrowed the US trade deficit with China, it has not revived American manufacturing. The report states that since the implementation of the tariffs, there has been no significant change in US manufacturing capacity or overall import dependence.
Data also shows that nearly half of the surveyed companies were affected by U.S. export controls and sanctions. Moreover, the survey confirms that U.S. export controls have not achieved the goal of “preventing China from obtaining U.S. technology”. Instead, it has led to a continuous increase in the proportion of surveyed companies whose sales have decreased.
Control measures are forcing buyers to seek new sales channels. 61% of the affected companies said that their sales share has flowed to Chinese competitors; another 47% of the surveyed companies said that their sales share has been taken by international competitors.
The report states bluntly, "Due to U.S. export controls, half of the companies interviewed have lost market share in China, and this proportion is astonishingly high."
The report suggests that unless the United States reneges its export control policies and works with partners who play important roles in the semiconductor supply chain, “Chinese companies will gain a larger market share in the future due to technological advancements”.
"When Chinese companies or foreign competitors can quickly fill the gaps, the effectiveness of (U.S. export controls) will be greatly reduced... This serves as a warning sign for U.S. competitiveness."
This report also states that American companies have “made some progress” in obtaining key minerals from China. However, it also notes that due to export controls and delays in approval processes, some rare earth elements are still not available.
In an interview with Reuters, USCBC President Tan Sen revealed that samarium-cobalt magnets, which are crucial for high-temperature aerospace and defense applications, as well as yttrium and cadmium, remain minerals that American companies find difficult to obtain.
However, when it comes to finding alternative sources, Tanzen also admitted that the Trump administration is making every effort to restore the mineral supply chains in the United States and its allies. But even with multiple measures taken by the US side, it will be difficult to completely resolve the problem of mineral supply shortages within the next three years.
The report indicates that American companies are establishing new supply chains, seeking viable alternatives in both technical and commercial aspects. “This will take several years and require government support.”
After US President Trump's historic visit to China, on May 20, the Chinese Ministry of Commerce explained the preliminary results of Sino-US economic and trade consultations. Regarding the export control of rare earths, the Sino-US economic and trade teams had thorough communication on issues related to export control. Both sides will jointly study and resolve each other's reasonable and legal concerns. The Chinese government implements export controls on key minerals such as rare earths in accordance with laws and regulations, and reviews applications for licenses that are compliant and for civilian purposes. China is willing to work with the US side to create favorable conditions for promoting mutually beneficial cooperation between enterprises of both countries and ensuring the security and stability of the global industrial and supply chains.
The Ministry of Commerce also stated that both China and the US reaffirmed their commitment to continuing to implement the achievements made in previous economic and trade consultations. The economic and trade teams of both sides will maintain close communication and consultation, in order to extend the duration of the joint economic and trade consultations in Kuala Lumpur.
In October 2025, the two sides reached a joint arrangement in Kuala Lumpur to address their respective concerns regarding economic and trade issues. Certain tariffs and non-tariff measures were suspended until November 10, 2026. These include the U.S. side’s 24% reciprocal tariffs and China’s related countermeasures; U.S. export control measures such as the 50% penetration rule and China’s related export controls; as well as U.S. measures under the 301 investigation regarding China’s maritime, logistics, and shipbuilding industries, along with China’s related countermeasures.
The person in charge of the US Department of Commerce said that the related arrangements are of great significance for the stability of Sino-US economic and trade relations. Extending these arrangements is in the common interests of both countries and meets the expectations of the international community.
