How a Chinese company adapted to import tariffs

Agilian Technology said it faced orders stuck for months and mounting pressure from customers to relocate production abroad after the United States raised tariffs in 2025. The company, an electronics-equipment maker based in China, ended 2025 with confidence that China would remain a key manufacturing base, provided tariff conditions do not change sharply again.

Tariffs disrupt orders and customer plans

After taking office in early 2025, President Donald Trump announced tariffs aimed at reviving domestic manufacturing. The policy unsettled companies, particularly those operating at global manufacturing hubs. For Agilian, which mainly manufactures for Western brands, orders from the United States accounted for more than half of revenue.

In 2024, as Trump rose in the polls, Agilian’s customers asked the company to ship goods to North American warehouses, increasing storage costs. After Trump was re-elected, Agilian said customer pressure intensified, with more late-night calls and requests to establish production outside China. One customer with family in Penang, Malaysia urged Agilian to set up a plant there.

Agilian expands abroad, but execution takes time

Agilian established a corporate entity in India, but most customers did not commit to manufacturing there due to concerns about slow production and long customs procedures. The company said it took a year to complete the India setup, according to CEO Fabien Gaussorgues.

After Trump took office, two rounds of tariffs totaling 20% on China worried customers, but they continued working with Agilian. On April 2, Trump announced an additional 34% tariff on Chinese exports. Agilian said the impact on customers was severe, with many orders canceled and its 12,000-square-meter factory in Dongguan soon filled with goods.

Anjoran said tariff escalation led to a freeze in activity. “Everything froze,” he said.

Broader manufacturing slowdown in the United States

Agilian said tariffs disrupted many Chinese companies, pointing to U.S. manufacturing conditions. The U.S. PMI showed manufacturing contracted for most of the last year, and in April 2025 the PMI fell to its lowest level since December 2023.

Penang production begins; India and the U.S. face constraints

Agilian moved to diversify production by targeting Penang and finding a partner plant to manufacture there. It also explored leasing industrial space in Dharwad, India, and considered shifting production to the United States. However, Agilian said the U.S. supply chain was not yet complete and remained dependent on Chinese components, while labor costs were higher.

In mid-2025, Agilian found a 4,000-square-meter factory in India and began discussing which products could be produced there. The company said China’s high tariffs made India more attractive to customers.

Tariff shifts and renewed pressure

Agilian said the situation changed after Washington and Beijing struck a deal in May to lift much of the tariffs on China. By August, with Dharwad still not ready, Trump raised tariffs on India by 50%, according to the company, to pressure India to stop importing Russian oil.

Despite the uncertainty, Agilian’s leadership said it wanted to become a multinational manufacturer. Pilot production in Penang began around mid-last year, but the company said operations took far longer than in China.

Export controls highlight U.S. dependence on China

Agilian said that in summer 2025, China’s export controls underscored the U.S. reliance on materials processed mostly in Beijing. It said sectors including automobiles and defense faced pressure due to shortages of components.

Tariff reductions after Trump-Xi meeting

By October, a Trump-Xi meeting helped reduce tariffs on China by a further 10 percentage points. At that time, Agilian said its customers stopped asking about tariffs or moving production abroad.

Outlook and management view

Agilian said the tariff policy under Trump was an experience to prepare for future tensions. Gaussorgues expected company revenue to grow 30% over the next three years, but he said Trump’s policies could again create obstacles. “At the start of January, I thought this could be a good year. Then the conflict in the Middle East erupted,” he said.

Photo: Reuters

A worker inspects a motherboard at a partner factory of Agilian Technology in Dongguan.