Tariffs on Chinese-made machinery drive up costs for U.S. manufacturers

Washington Post

27-04-2025

President Donald Trump's effort to revitalize U.S. manufacturing with sweeping tariffs on Chinese goods may hit a snag: American factories depend on machines and components from China.
The world's two largest economies have been locked in an escalating trade battle for months. Though U.S. officials have recently started to ease their tone on China, Beijing has remained defiant. Meanwhile, the triple-digit tariffs have wreaked havoc on the stock market and upended global supply chains.
Trump claims that his trade policies are necessary to seed a 'golden age' of U.S. manufacturing, but trade experts and companies say the broad tariffs may actually complicate bringing back some industries. The U.S. economy not only is reliant on China for finished products like toys and laptops but also depends on Chinese tools to make everything from cars to electronics in American factories.
'The U.S. machinery sector in general is not in great shape,' said Susan Helper, an economist at Case Western Reserve University in Ohio and former senior adviser for industrial strategy to the Biden administration. 'Depending on the industry, China has a huge amount of the capacity.'
The surging price of industrial machines because of tariffs is just one example of the rippling economic chaos and uncertainty unleashed by the trade war, highlighting both the interdependence of the U.S. and Chinese economies and the difficulty of reshoring supply chains that have grown increasingly globalized in recent decades.
'It's important to be able to make the things that allow us to make things,' Helper added. 'But it's not something that happens overnight, and tariffs alone aren't going to do it.'
Over the past decade, China's machinery industry has risen to global dominance.
Exports of machines from China have more than doubled since 2015, to reach $869 billion in 2024, according to the China Machinery Industry Federation, an industry association. Though Germany has traditionally been a leader in advanced machinery, experts say China has quickly closed the gap with its European rival.
China is the largest machine exporter in the world, and the United States is the largest machine importer, with China providing 17 percent of U.S. machinery imports in 2023, according to the U.S. International Trade Commission.
That 17 percent figure may underestimate the United States' dependence on Chinese tools, however. For many products, including machines, direct imports from China do not fully account for the supply chain's exposure to the country, because machines may be made with Chinese parts even when imported from other places.
Richard Baldwin, a professor at IMD Business School in Switzerland, has studied this phenomenon, which he calls 'hidden exposure.' His research shows that machinery is one of the U.S. industries with the most hidden dependence on China.
'Every manufacturing center in the whole world depends heavily on Chinese industrial intermediate inputs,' he said, adding that about 40 percent of Chinese exports to the U.S. are intermediate, not final goods. 'You really can't avoid it.'
Machine components like bearings and gears, as well as hydraulic systems that contain pumps and valves, can be sourced at scale only from China, according to the Association of Equipment Manufacturers, a U.S. trade group.
Adding to the supply-chain troubles for U.S. manufacturers: Beijing has implemented export restrictions in response to the trade war on rare-earth minerals, which are essential for a wide array of U.S. industries — including defense, health care and technology.
Though Trump has signaled that he wants more Chinese investment in the U.S., the tariffs have led some Chinese manufacturers with U.S. expansion plans to reconsider.
John Ling, a consultant who helps Chinese companies with U.S. factory projects, said he is hearing from Chinese companies that are 'very concerned' about sourcing required inputs and machinery at a reasonable price given the new tariffs.
The investment required to set up a U.S. factory would double in some cases, he said, and may dissuade Chinese companies from establishing new U.S. manufacturing bases.
'Cost is certainly adding up, and it's causing some projects to cancel or delay,' he said.
One building-material manufacturer described the difficulty of setting up shop in the U.S. without Chinese machinery. The company, which was founded in China and has since set up factories in the U.S. and Southeast Asia, said the machines required for its U.S. factories are sourced almost entirely from China or Germany.
'You can't buy any of this stuff in the U.S.,' said a company representative, who spoke on the condition of anonymity because of the sensitivity of policy discussions in the U.S. and China.
The company was not caught flat-footed, however. In the run-up to last year's election and in preparation for higher tariffs, the manufacturer sent over a significant amount of machinery from China, which it needs to expand production in the U.S.
The uncertainty of the tariffs is also making business decisions difficult for manufacturers.
The Trump administration has sent mixed messages about whether the tariffs will remain in place on Chinese goods, while Washington abruptly reversed course on tariffs on other countries in early April.
Wen Han, the founder of Windrose Technology, an electric-truck firm with manufacturing in China and assembly plants in the U.S. and Europe, said he has paused all purchasing decisions for several weeks to 'wait out the tariff craziness.'
Though Windrose's U.S. plants are primarily engaged in assembly and don't depend on Chinese machinery, they are reliant on certain components from China.
Baldwin, of the IMD Business School, said Washington's inconsistent messaging hinders the goal of boosting domestic manufacturing.
'There's no doubt that we're in a new world where bringing more manufacturing back to the United States is a good thing,' he said. 'But since it's a very difficult thing, the U.S. should be thinking strategically about which industries to focus on and then realizing that this is a 10-year plan, not a 10-month plan.'
Meanwhile, Chinese machinery companies are doing their best to pursue markets without trade levies, such as Southeast Asia and Africa. Beijing has sought to cement economic ties with countries including Vietnam this month in the face of pressure from Trump.
Chen Bin, the deputy director of the China Machinery Industry Federation's expert committee, said at a news conference in February that he remains 'optimistic' about exports despite the U.S.-China trade showdown, according to state media.
'Chinese companies are proactively expanding their presence in emerging markets and increasing research and development investments to enhance product competitiveness,' he said.
Pei-Lin Wu in Taipei, Taiwan, contributed to this report.