Trump’s Tariffs Are Sending Some Companies Back to China
Posted: 29 Jul 2026, 19:38
For some U.S. brands seeking a location for their factories, the economic logic is once again pointing to China.
On a dusty piece of land south of Bangkok, a flashlight factory stands full of promise. Workers hunch over tables gluing components. But only half the land has been built. Parts of the factory stand empty, waiting for future production lines.
The factory is owned by a Chinese manufacturer that makes flashlights for American customers. When President Trump’s tariffs on China hit 145 percent last year, companies embarked on a panicked search for cheaper alternatives in countries like Vietnam and Thailand, including this facility.
But since then, U.S. tariffs on China have come down sharply, leaving the leaders of some of those same companies with second thoughts.
“Have we pulled back to China? Yes, we have,” said Phil Laster, the chief operations officer of Alliance Consumer Group, a Texas-based company that sells flashlights made in the Thai factory to U.S. customers. Mr. Laster had encouraged the Chinese manufacturer, Ningbo Bright Electric, to build a factory outside China to make his products, but he is hitting the brakes on the strategy now that U.S. duties on Chinese goods are more comparable to those on products from Thailand.
One of the most surprising outcomes from a whiplash year of tariffs may be that China has emerged in a position of relative strength, with significantly lower tariffs than last year. The Trump administration last week imposed a new tariff rate on Chinese exports of 12.5 percent, similar to rates for dozens of other countries, as it works to resurrect the tariffs struck down in February by the Supreme Court.
Chinese exports are still subject to other duties, including from Mr. Trump’s first term, and more tariffs could be on the way. But many industry executives and analysts speculate that the Trump administration will keep future tariffs on China relatively restrained to try to stabilize a rocky relationship.The overall U.S. weighted tariff rate on Chinese goods is slightly above 23 percent, according to an analysis by Guojin Securities, a Chinese financial firm. And for some products, the tariff rate for China is identical to the rate on exports from Southeast Asian countries, where many companies have moved their supply chains.
This has created a conundrum for executives like Mr. Laster, who would prefer to diversify his supply chain. But making flashlights in Thailand costs as much as 15 percent more than it does in China, as a result of higher costs for materials and transport. Mr. Laster is also under pressure from Chinese competitors that are selling flashlights on Amazon for less than it costs ACG to ship its products to the United States.
“We don’t want to go back to China, but at the same time, we’ve got a business to run,” he said.
Mr. Trump has long blamed China for undercutting American competitors and has imposed punishing tariffs in an attempt to force manufacturers back to U.S. shores. In his first term, he waged a trade war on China, imposing tariffs on about two-thirds of its exports beginning in 2018. In his second term, China was his first target. He raised duties on Chinese exports to triple-digit levels, before China responded by cutting off the supply of critical minerals, forcing him to back down.
Amid all that uncertainty, many executives found factories outside China. As a result, U.S. goods imports from China have plummeted since peaking in 2018. Chinese imports fell by nearly a third last year, while goods from Mexico, Vietnam and Taiwan surged.
But Mary E. Lovely, an economist at the Peterson Institute for International Economics, said that China had a large cost advantage, and that if its ultimate tariff differential with other countries ended up small, that shift of business out of China could reverse.
“If tariffs on China settle near those on alternative locations, we expect to see some companies returning to their Chinese suppliers,” Ms. Lovely said.
Torch City
To see why it has been so hard for companies to break with China, look no farther than “Torch City.” Similar to the many Chinese cities that have specialized in buttons or wedding dresses, Xidian, a low-lying industrial town near the East China Sea, produces about 60 percent of the world’s flashlights, according to Chinese state media.
The town is packed with hundreds of manufacturers that pump out LED bulbs, circuit boards and switches at competitive prices. And Xidian is near some of the world’s biggest ports and low-cost shipping lanes that ferry vast quantities of goods across the Pacific to American shoppers.
“China keeps doing really well because they just have the scale to produce things that much cheaper,” said Deborah Elms, who is head of trade policy at the Hinrich Foundation in Singapore.
“Economic logic is going to drive you to have a very large share of manufacturing in China,” she added.
source https://www.nytimes.com/2026/07/29/busi ... china.html
On a dusty piece of land south of Bangkok, a flashlight factory stands full of promise. Workers hunch over tables gluing components. But only half the land has been built. Parts of the factory stand empty, waiting for future production lines.
The factory is owned by a Chinese manufacturer that makes flashlights for American customers. When President Trump’s tariffs on China hit 145 percent last year, companies embarked on a panicked search for cheaper alternatives in countries like Vietnam and Thailand, including this facility.
But since then, U.S. tariffs on China have come down sharply, leaving the leaders of some of those same companies with second thoughts.
“Have we pulled back to China? Yes, we have,” said Phil Laster, the chief operations officer of Alliance Consumer Group, a Texas-based company that sells flashlights made in the Thai factory to U.S. customers. Mr. Laster had encouraged the Chinese manufacturer, Ningbo Bright Electric, to build a factory outside China to make his products, but he is hitting the brakes on the strategy now that U.S. duties on Chinese goods are more comparable to those on products from Thailand.
One of the most surprising outcomes from a whiplash year of tariffs may be that China has emerged in a position of relative strength, with significantly lower tariffs than last year. The Trump administration last week imposed a new tariff rate on Chinese exports of 12.5 percent, similar to rates for dozens of other countries, as it works to resurrect the tariffs struck down in February by the Supreme Court.
Chinese exports are still subject to other duties, including from Mr. Trump’s first term, and more tariffs could be on the way. But many industry executives and analysts speculate that the Trump administration will keep future tariffs on China relatively restrained to try to stabilize a rocky relationship.The overall U.S. weighted tariff rate on Chinese goods is slightly above 23 percent, according to an analysis by Guojin Securities, a Chinese financial firm. And for some products, the tariff rate for China is identical to the rate on exports from Southeast Asian countries, where many companies have moved their supply chains.
This has created a conundrum for executives like Mr. Laster, who would prefer to diversify his supply chain. But making flashlights in Thailand costs as much as 15 percent more than it does in China, as a result of higher costs for materials and transport. Mr. Laster is also under pressure from Chinese competitors that are selling flashlights on Amazon for less than it costs ACG to ship its products to the United States.
“We don’t want to go back to China, but at the same time, we’ve got a business to run,” he said.
Mr. Trump has long blamed China for undercutting American competitors and has imposed punishing tariffs in an attempt to force manufacturers back to U.S. shores. In his first term, he waged a trade war on China, imposing tariffs on about two-thirds of its exports beginning in 2018. In his second term, China was his first target. He raised duties on Chinese exports to triple-digit levels, before China responded by cutting off the supply of critical minerals, forcing him to back down.
Amid all that uncertainty, many executives found factories outside China. As a result, U.S. goods imports from China have plummeted since peaking in 2018. Chinese imports fell by nearly a third last year, while goods from Mexico, Vietnam and Taiwan surged.
But Mary E. Lovely, an economist at the Peterson Institute for International Economics, said that China had a large cost advantage, and that if its ultimate tariff differential with other countries ended up small, that shift of business out of China could reverse.
“If tariffs on China settle near those on alternative locations, we expect to see some companies returning to their Chinese suppliers,” Ms. Lovely said.
Torch City
To see why it has been so hard for companies to break with China, look no farther than “Torch City.” Similar to the many Chinese cities that have specialized in buttons or wedding dresses, Xidian, a low-lying industrial town near the East China Sea, produces about 60 percent of the world’s flashlights, according to Chinese state media.
The town is packed with hundreds of manufacturers that pump out LED bulbs, circuit boards and switches at competitive prices. And Xidian is near some of the world’s biggest ports and low-cost shipping lanes that ferry vast quantities of goods across the Pacific to American shoppers.
“China keeps doing really well because they just have the scale to produce things that much cheaper,” said Deborah Elms, who is head of trade policy at the Hinrich Foundation in Singapore.
“Economic logic is going to drive you to have a very large share of manufacturing in China,” she added.
source https://www.nytimes.com/2026/07/29/busi ... china.html