‘It’s just musical chairs’: Brands are moving manufacturing out of China — but not back to the US
When Donald Trump imposed steep tariffs on Chinese goods earlier this spring, the goal was clear: push U.S. brands to bring manufacturing back home. But weeks into the rollout — and even after a temporary 90-day tariff reduction — few companies are relocating their supply chains to the U.S. In fact, most are doing the opposite: moving out of China, yes, but into countries like Vietnam, India, Sri Lanka and Thailand.
That’s because for many consumer goods, including electronics, textiles and furniture, American manufacturing simply isn’t viable, according to a dozen brand executives who spoke to Modern Retail for this story. Labor costs are too high, factories are scarce and many components aren’t made here at all. While some companies are investing in U.S. production on a small scale, the vast majority are moving elsewhere in Asia. All the while, companies are juggling multiple trade-offs: managing sky-high tariffs, scrambling to find factory capacity elsewhere and explaining it all to customers without tanking sales.
“It’s just musical chairs,” said Matthew Hassett, founder and CEO of Loftie, which makes digital clocks and lamps in China. “Everyone’s just moving to other countries out of China, and none of the chairs are coming back to the United States.”
China exodus
Manufacturers weigh three main factors when deciding where to produce, according to Patrick Penfield, a professor of supply chain practice at Syracuse University: the upfront capital investment required to build or adapt a facility, the relative cost of labor, and the price of importing raw materials.
“Combining all three of those things, it’s just easier for manufacturers to move out of China and go someplace else in Asia,” Penfield said.
For Bogg Bag, a maker of perforated plastic totes, the tariffs have sparked an ongoing tug-of-war with its supply chain. In January, Vaccarella and her team visited factories in Vietnam and Sri Lanka to explore new manufacturing partners and scale back production in China, where Bogg’s bags are made. The writing was on the wall, as Trump had frequently discussed imposing steep tariffs on China while on the campaign trail, and during his inaugural address on Jan. 20, he promised to “tariff and tax foreign countries to enrich our citizens.”
After the U.S. and China announced a temporary trade agreement last week that lowers tariffs on Chinese imports from 145% to 30% for 90 days, Bogg resumed production in China, but the company is still retaining new manufacturing partners in other countries. More recently, the brand has been looking at factories in Indonesia and Cambodia as potential partners.
“We are keeping all of our options open,” said Bogg CEO and founder Kim Vaccarella. The recent reprieve “is only temporary,” and so “we need to be ready should the 30% not hold beyond the 90 days,” she said.
Vaccarella said diversifying manufacturing beyond China to other countries will cost Bogg, which generated $100 million in revenue in 2024, upwards of $1 million.
Despite shifting production, China’s manufacturing dominance is felt outside the country. Even in alternative manufacturing countries, “the machinery all comes from China. The raw materials come from China,” Vaccarella said.
Too costly, too complex
Some brands are exploring U.S. manufacturing, but mostly as a contingency plan or small-scale experiment. “Right now, we’re just exploring it in a very limited way,” Vaccarella said. “It’s not something we can scale quickly, especially given our size and product format.”
For Loftie’s Hassett, U.S. production has never been a realistic option, and the latest tariff whiplash only underscores that. “Our two hero products are definitely made in China, simply because all the components come from either China, Taiwan or South Korea,” he said. “We don’t make those kinds of components — not in the U.S., but also not in Canada or Mexico.”
Hassett said his team explored moving manufacturing to the U.S., but it would have pushed the retail price of its lamp “into the thousands of dollars.” Instead, Loftie is trying to relocate to Thailand, although reciprocal tariffs there may spike to 36% after July. “There’s no certainty that’s a long-term solution,” he said.
That uncertainty is what’s driving companies to make defensive supply chain moves — not toward the U.S., but to whichever country offers the best combination of capacity and tariff relief.
Brandon Fuhrmann, an Amazon seller whose kitchen products are entirely made in China, is also exploring factories in Taiwan and Thailand. But so far, nothing has matched the reliability and pricing of his Chinese partners.
“I hope I don’t have to move anything,” he said. “I love working with my factories in China — it’s efficient, I know the process. I’ve got a whole pipeline of products that I don’t think I could make outside of China.”
After already trimming his product catalog by 25%, he’s preparing to make further cuts if he reduces reliance on China.
Made in Asia
For many consumer brands, manufacturing outside Asia isn’t an option.
“There are very few companies [in the U.S.] that do that, but none do it at scale,” Hassett said, referring to consumer electronics. “If we made something really high-end, then it would be feasible. But consumer electronics? No way.”
As of 2024, one-fourth of all electronics — or $127 billion in value — imported into the U.S. originated from China. China’s dominance is particularly evident in specific product categories. For instance, 97% of alarm clocks and 77% of video game consoles sold in the U.S. are manufactured in China, according to the U.S. International Trade Commission. Additionally, a substantial portion of smartphones, portable computers and lithium-ion batteries are sourced from Chinese manufacturers.
James Fayal, founder of tea brand Zest, said sourcing alternatives to Chinese green tea is nearly impossible. “It’s really hard to get that quality at a manageable price from anywhere other than China,” he said. “You can’t really grow tea in the United States.” Indeed, China is responsible for 80% of the world’s global green tea output.
Greg Shugar, who runs a neckwear business called Beau Ties of Vermont, said he’s explored making silk goods in the U.S., but quickly realized it was impossible without undermining product quality. “All the best looming machines that make silk are in China,” he said. “Plus, I have a 20-year relationship with my current factory. There’s just so much that goes into a 20-year business relationship that I’d have to almost start from zero on.”
Reshoring reality
To be sure, some companies are reshoring — just not many. As Modern Retail previously reported, Portland-based footwear brand Keen recently announced it would open a U.S. factory and hold prices steady despite higher labor costs. But even Keen still relies on overseas manufacturing for many of its products.
Earlier this month, Pandora CEO Alexander Lacik told Bloomberg TV that the jewelry company will not move production to the U.S., saying it “simply wouldn’t work for us because of us being an affordable proposition.” Other major companies including Apple and Hasbro have announced plans to shift production out of China to other countries.
But for many brands, executives say the idea of “Made in the USA” remains more political talking point than practical reality.
“None of this is normal or sustainable,” said Hassett. “It’s all going to lead to inflation, higher prices, shortages and the collapse of many businesses.”