Tariffs imposed by Donald Trump aimed at hurting Chinese manufacturing have instead underscored how difficult it is to replicate China’s industrial base, according to one electronics maker navigating a turbulent 2025.
Agilian Technology, which produces goods largely for Western brands, saw US orders accounting for more than half its revenue frozen for months, with clients urging it to shift production outside China.
Tariffs Trigger Disruption
The tariffs created widespread disruption for Chinese companies, with China’s official purchasing managers’ index contracting for much of last year. April 2025 marked its weakest reading since December 2023.
However, Beijing’s retaliation including export controls on key minerals and metals required by US firms led to a reduction in levies. By March, China’s official PMI recorded its fastest growth in a year.
Recovery and Resilience
This rebound allowed Agilian, a $30-million-a-year business, to recover and reaffirm its reliance on China as a critical manufacturing base, even as it pursued offshore options.
“The data confirms that Trump’s tariffs indeed haven’t derailed the momentum that we’ve seen in China’s manufacturing sector,” said Nick Marro. He added that the levies “resulted in a restructuring of trade linkages and supply chains.”
Trade Shifts and Surplus Growth
China’s trade surplus for the first two months of 2026 rose to $213.6 billion from $169.21 billion a year earlier, while the 2025 surplus grew to a record $1.2 trillion.
Exports to the US, however, fell 20% in 2025, impacting manufacturers dependent on that market, said Agilian chief executive Fabien Gaussorgues.
Uncertain Diplomacy
Speaking from Dongguan, Gaussorgues said the best outcome from Trump’s expected visit to China in May would be continued dialogue.
“The best we can hope for is probably a pledge for both sides to keep talking,” Marro said, pointing to expectations that the visit could extend a fragile detente.
He Yadong said both sides should implement agreements reached in previous talks.
Meanwhile, Denis Depoux described China’s control over rare earths as a powerful trade lever.
Preparing for Disruption
Agilian executives now see Trump’s tariff policies as a guide for handling future shocks.
Clients rushed shipments to North American warehouses in 2024, driving storage costs sharply higher, said vice-president Renaud Anjoran.
Following Trump’s re-election, “panicked” clients frequently called after midnight, urging the company to diversify production.
Offshoring Challenges
The company explored expanding in Malaysia and India, but faced delays and operational challenges.
“India takes time,” Gaussorgues said, noting it took a year to establish a company there.
Attempts to shift production to the US were also constrained by incomplete supply chains and higher labour costs.
Tariff Escalation and Freeze
After Trump took office, successive tariff hikes including a 34-percentage-point increase in April led to widespread order cancellations.
Goods accumulated at Agilian’s 12,000-square-metre factory in Dongguan as tariffs escalated above 100% on both sides.
“Things were frozen,” Anjoran said.
Partial Relief and Renewed Activity
A Washington-Beijing deal in May removed most tariffs, while a later meeting between Trump and Xi Jinping reduced them further.
By the second half of 2025, Agilian recorded its busiest period ever, with production hours rising 29% from the first half. Orders resumed as clients regained confidence.
China Remains Indispensable
Despite continued diversification into India and Malaysia, Agilian sees its Dongguan base as essential due to the lower cost and higher quality of Chinese components.
The company aims to grow revenue by 30% over the next three years, though concerns remain about future tariff escalations.
“I started in January saying, okay, this might be a good year and then the Iran war started,” Gaussorgues said.
(with inputs from Reuters)
