Chinese Yuan Or Renminbi (rmb) Notes in Beijing China 29 December 2015 China's Currency Fell to Its Weakest in More Than Four and a Half Years on 29 December 2015 the Yuan Also Known As the Renminbi Dropped 114 Basis Points to 6 4864 Against the Us Dollar on 29 December Its Weakest Since June 2011 According to Data From the China Foreign Exchange Trading System China BeijingChina Currency - Dec 2015

The casualties of the U.S.-China trade war are lining up.

Tiffany & Co. is seeing fewer Chinese tourists, Calvin Klein and Tommy Hilfiger-parent PVH Corp. said the strong U.S. dollar is hurting its outlet business and that the fiery rhetoric is dragging on consumer psyche on both sides of the Pacific. Ralph Lauren Corp., Skechers and many others have analysts asking about their supply chains in China. Companies are lining up to petition Washington to not go ahead and keep raising tariffs.

And American fashion brands hoping wealthy Chinese investors could be their knight in shining armor might not get their happy ending anytime soon.

While Chinese investors have swept a number of European labels off their feet (think Lanvin, Bally and Mary Katrantzou), the flow of cash from the Asian giant to their U.S. counterparts has been much slower, with the notable exception of private equity fund Green Harbor Investment recently acquiring a controlling stake in Jason Wu for an undisclosed sum.

Experts said this trend is unlikely to reverse in the near future and could in fact become exacerbated. That’s because as the worsening trade dispute between China and the U.S. shows no sign of abating, there is increasing evidence that Chinese firms are starting to put the brakes on their U.S. investment plans.

The impact can already be seen in the data. According to the China General Chamber of Commerce-USA’s latest health check of business between the two countries, the level of new Chinese foreign direct investment into the U.S. plunged 90 percent from its peak in 2016.

“This environment’s uncertainty shakes our members’ confidence and discourages them from making further investments in the U.S.,” said Chen Xu, the chamber’s chairman, who is also president and chief executive of Bank of China USA.

Highlighting the discrepancy between Europe and the U.S., a separate study by Baker McKenzie found that foreign direct investment into the U.S. plunged from $29 billion in 2017, to just $5 billion in 2018 while Europe saw $22.5 billion of Chinese investment last year.

At the same time, Chinese firms sold $13 billion worth of North American assets last year, and just $5 billion in European holdings.

In addition to slapping tariffs on each other, both sides have become stricter about investment. Not only were billions of dollars of mergers and acquisitions blocked by the U.S. Committee on Foreign Investment, many companies held back from a purchasing spree after the Chinese government issued guidance restricting investments in certain foreign assets.

While these rules don’t appear to directly apply to fashion, there is some evidence that the industry has been affected — even in Europe, with rumors that Milan-based jewelry firm Buccellati was looking for a coinvestor to boost its business along side of its current owner, China’s Gansu Gangtai Group.

Aly Auberger, chair of law firm Baker McKenzie’s consumer goods and retail group, told WWD that there’s an “overall climate of unfriendliness that means that even non-sensitive sector investments may not be targets for Chinese money.”

Investment banker William Susman, who is a managing director at and advised Proenza Schouler on its deal with distressed-investment specialist Mudrick Capital Management last year, thinks that the Chinese government could further crack down on investments, while firms could also be wary of further measures the administration of President Donald Trump could undertake.

“Chinese companies will be worried that investments in the U.S. could get some random taxes or other negative publicity as the Trump administration has shown a willingness to act irrationally and inappropriately without cause,” he said.

As for when or if the trade war could be resolved, Erin Ennis, senior vice president of the U.S.-China Business Council, cautioned that “there definitely is a risk could that it could drag on.”

The next big milestone could come later this month, when President Donald Trump and China’s President Xi Jinping could meet at the G20 leaders summit in Japan. That would be their first meeting since the trade talks broke down in May, when Trump said Chinese tried to renege on a number of commitments. That angered the U.S. so much that it raised tariffs on $200 billion worth or goods and unveiled plans to slap 25 percent tariffs on the rest of Chinese imports. The date for that last hike, which would hit apparel and footwear, has not been set but Trump has indicated that a decision could be made following the G20 meetings.

“It’s unlikely to think that they would get to a full resolution by the end of the month because our understanding is that they haven’t been negotiating since things broke down in May, but it’s certainly possible that they could at least come up with some sort of a framework to move forward that might get some reprieve,” Ennis said.

But it’s not only rapidly deteriorating relations between the U.S. and China that are driving investment trends. Before all this started, Chinese investors appeared to be favoring European brands much more than their American counterparts.

Apart from the Jason Wu acquisition, which was Green Harbor Investment’s first foray into fashion and is understood to have been in the works for a long time, and Fosun’s 2013 minority investment into St. John Knits, there hasn’t been a lot of Chinese cash injections into American fashion brands.

In contrast, money has been flowing into Europe. Fosun paid over 55 million euros for a majority stake in French luxury lingerie brand Wolford and also acquired a controlling stake in Lanvin, while Chinese textile and apparel producer Shandong Ruyi Group has the majority interest in Bally. Elsewhere, Wendy Yu of Hong Kong-based Yu Holdings last year took a stake in the London label Mary Katrantzou.

But for U.S. brands wanting to grow and looking for a wealthy investor, all is not lost, according to Threadstone’s Susman, as there are still active investors at home in the U.S. or in Europe.

“I don’t believe that companies or brands are specifically looking exclusively for Chinese partners.  I think as a result, the shift may be more on U. S. investors or European investors,” he said.