How a Chinese company learned to live with import taxes

After taking office in early 2025, US President Donald Trump announced a series of new import tax policies to revive the domestic manufacturing industry. This policy causes many businesses, especially in major global production centers, to struggle. However, for Agilian Technology – an electronics manufacturer in China, a turbulent 2025 ends with the belief that the country is still a difficult place to replace – as long as things do not change too drastically.

Agilian produces mainly for Western brands. Of which, orders from the US account for more than half of revenue.

In 2024, as Mr. Trump surged in pre-election polls, Agilian customers asked the company to ship goods to warehouses in North America. Other US importers did the same, causing warehouse prices to skyrocket.

Then, as soon as Mr. Trump was re-elected, the midnight calls became more frequent, said Agilian Technology Vice President Renaud Anjoran. A customer with family in Penang, Malaysia even urged Agilian to set up a production facility in the country.

Agilian then established a legal entity in India. However, most customers do not support production here, due to concerns about slow production and lengthy customs procedures. “It took us a year to complete the establishment of the company in India,” recalls Agilian CEO Fabien Gaussorgues.

After Mr. Trump took office, two total tariff increases of 20% with China made customers worried, but they continued to cooperate. On April 2, Mr. Trump announced an additional 34% reciprocal tax on Chinese exports.

For Agilian customers, “this is a disaster”. Many people have canceled their orders. Not long after, their 12,00 square meter factory in Dongguan was filled with shelves of goods.

China’s tax increase in response to the US further escalated tensions. The tax rates imposed on each other by both sides sometimes exceeded 100%. “Everything froze,” Anjoran said.

Not only Agilian, new taxes have caused many other Chinese businesses to fall into chaos. The country’s Purchasing Managers’ Index (PMI) showed manufacturing in decline for much of last year. In April 2025, PMI even dropped to its lowest since December 2023.

Agilian then decided to choose Penang and found a partner factory to produce there. They also explored renting industrial space in Dharwad (India) and even considered moving production to the US. However, Agilian realized that the supply chain in the US is not complete, still depends on Chinese components and has higher labor costs.

By mid-2025, Agilian will find a 4,000 m2 factory in India. They began to discuss what products could be produced here. China’s high taxes make India more attractive to customers.

However, everything turned upside down when the agreement between Washington and Beijing in May helped remove most of the taxes imposed on China. In August, when the factory in Dharwad was still not ready, Mr. Trump increased tariffs on India by 50%, to force the country to stop buying Russian oil.

Still, Anjoran continues with the plan: “We want to become a multinational manufacturer. Let’s look at the long-term trend.” Trial production in Penang also began in the middle of last year. However, Agilian realized that “everything takes a lot longer” than in China.

In the summer of 2025, China’s export controls revealed the extent of America’s dependence on materials processed almost exclusively in Beijing. The auto industry, defense and many other sectors in the US are all under pressure due to lack of components.

In October, the meeting between Mr. Trump and Chinese President Xi Jinping helped reduce tariffs on Beijing by another 10 percentage points. At that time, Agilian’s customers no longer asked much about taxes or moving production abroad.

Agilian said the second half of 2025 was its busiest period, in terms of production hours, with a 29% increase compared to the first half of the year. When the tax was still at a high but acceptable level, the buyer reopened the order and placed a new order. Their annual revenue is about 30 million USD.

Gaussorgues said it will continue to develop factories in India and Malaysia “as a backup”. However, the factory’s position in China remains a key factor for growth.

Above Reutersanalysts say that Beijing’s response measures, including export controls of essential minerals and metals, have helped reduce import tax pressure. In March 2026, China’s PMI increased at the fastest pace in a year.

“Data shows that Mr. Trump’s taxes have not really disrupted the growth momentum of China’s manufacturing industry. The tariffs only lead to restructuring of trade links and supply chains,” said Nick Marro, chief economist for Asia at the Economist Intelligence Unit.

China’s trade surplus in the first 2 months of 2026 was 213.6 billion USD, up from 169 billion USD in the same period last year. In 2025, the country’s trade surplus will increase by 20% to a record of 1,200 billion USD.

However, exports to the US will decrease by 20% in 2025, causing losses to manufacturers dependent on this market, Gaussorgues said. He wondered whether Mr. Trump would achieve any breakthrough during his visit to China in May.

“The best scenario is that the two sides commit to continuing dialogue and establishing a framework to prevent trade tensions from escalating like last year,” Marro said.

Economists and business leaders also expect Mr. Trump’s visit to prolong the “truce” between the two economies. He Yadong, spokesman for the Chinese Ministry of Commerce, said the two countries need to implement what they agreed on in previous meetings and future rounds of negotiations.

Currently, Agilian’s leadership considers Mr. Trump’s tax policy as experience to cope with future tensions. Gaussorgues expects the company’s revenue to increase 30% in the next three years, but is also worried that Mr. Trump’s policies may cause obstacles again. “In early January, I thought this could be a good year. Then the war in the Middle East broke out again,” he lamented.