With the US using tariffs to try to bring manufacturers back, an unpredictable trade policy, a contentious immigration enforcement strategy, and declining consumer demand have dimmed the appeal of the American dream for some Chinese investors currently in the country.
On Monday, President Donald Trump delayed the launch of a new set of his so-called mutual tariffs – which were initially scheduled for July 9 – moving the implementation date to August 1. His recent actions includetariffs as high as 40 percent on goods coming from 14 nations- several of which are closely allied with China in trade, such as Japan, South Korea, Laos, and Kazakhstan.
From the beginning of his tenure, Trump has used tariffs as a central tool to revitalize American manufacturing, increase jobs for blue-collar workers, and reduce the trade deficit. However, this approach is causing difficulties for investors like Peter Wang, who established a mobile-phone-repair factory in Dallas, Texas, in 2002.
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"Trump's tariffs have definitely attracted more American customers to us - but they still want the speed and low costs associated with Asian factories, and that's simply not feasible in the US," said Wang, whose plant employs over 200 workers and is currently operating at a break-even point.
When American customers wish to test new products, Chinese manufacturers can quickly adapt - they are flexible, involved, and willing to make it happen," he said. "In the US, an entire production line can come to a halt simply because the system isn't properly configured.
The U.S. customs and tax systems do not provide any viable solutions. If I have to incur such high expenses, why would I consider moving production to the U.S.?" he stated, adding that he continues to obtain raw materials from Asia, albeit at a higher cost. "Trump aims to bring manufacturing back, but his advisors appear not to grasp how the supply chain truly functions.
Trump has positioned bringing manufacturing back as a core element of his economic strategy since his initial term, and this year's global tariff initiative has further advanced that goal.
Nevertheless, not all individuals perceive it as a complete loss, highlighting the increased prospects they recognize for local suppliers in the downstream sector.
"Materials sourced from Asia are becoming more expensive, leading more local businesses to opt for domestic suppliers — which is actually helping many smaller American suppliers further down the supply chain," Wang stated.
As per the US Bureau of Economic Analysis, manufacturing contributed $2.9 trillion to the economy in the first quarter of 2025, representing a 0.6 percent rise compared to the same period in the previous year, highlighting its significant role in the economy after finance, business services, and government.
US manufacturing activity indicated a recovery in the previous month, as the Institute for Supply Management's Purchasing Managers' Index increased to 49.0 in June compared to 48.5 in May.
Evan Gu, a mattress producer, moved his modest factory from Guangdong province to the San Francisco Bay Area in 2018 in order to escape tariffs implemented during Trump's initial term. He allocated $200,000, and the relocation was completed within two months.
Although existing tariffs have not affected Gu's supply chain or his 12 employees, he notices a different form of pressure emerging.
"From what I've heard from my customers and others, many of them report that their buying power has decreased by 30 to 40 percent, and it seems like no one is willing to spend money anymore, as they are facing much higher prices due to the tariff increase," Gu said.
Mr. Zheng, a Chinese investor who established an automotive components factory in Texas in 2023, believed he was following the guidelines—doing precisely what the US encouraged by bringing manufacturing back to the country. However, even this has not protected him from increasing scrutiny.
When Trump initially introduced the 25 percent tariff in 2019, we thought about relocating from the Yangtze River Delta, but the pandemic put our plans on hold," he stated, speaking under the condition of anonymity. "Later, in 2024, just after the factory was finished, Biden announced a new set of tariffs.
And now, the immigration policies during Trump's second term have made things even more challenging, Zheng stated.
Mexicans put in a lot of effort but are compensated well below the local minimum wage," he stated. "And now, they must also be concerned about ... the large-scale deportation wave.
Indeed, Trump implemented corporate tax reductions – but his policies are extremely unpredictable. We invest two weeks in training an individual, and just as they become productive, immigration intervenes and removes them. How can we make long-term plans under such circumstances?
The U.S. Bureau of Labor Statistics stated in May that approximately 414,000 positions in manufacturing were available, marking a small increase from 392,000 in April, as persistent labor shortages continue within the industrial sector.
Evan Hu, a factory developer based in Texas, mentioned that his business was once thriving — but that has changed. Since last year, he has been receiving questions from Chinese companies operating in areas like semiconductors, electric vehicles, and solar energy, all interested in starting operations in the state.
Four factories are currently operational under his leadership, with three additional ones in progress. However, he mentioned that increasing policy challenges are beginning to slow the momentum.
Last year, Chinese investors were waiting in line to inquire about establishing factories," Hu said. "But since Texas passed thatland-restriction law(last month), interest plummeted in the second quarter.
The legislation was enacted on June 20, introducing significant limitations on property ownership by individuals and organizations from specified nations, such as China, Iran, North Korea, and Russia. The law becomes active on September 1, prohibiting Chinese investors from purchasing land or long-term assets within the state.
The government is counting on residents to establish factories," Hu stated. "However, most Americans aren't showing interest - building factories is extremely expensive here, and they're not keen on taking such a significant risk.
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This piece was first published in the South China Morning Post (www.scmp.com), a top news outlet covering China and Asia.
"Each investment is a risk," and Chinese factories are experiencing "significant losses" by manufacturing in Southeast Asian countries subjected to Trump's tariffs, as reported by industry experts.
