(Bloomberg) -- When President Donald Trump said last week that he was using tariffs to remake American trade policy and bolster domestic manufacturing, entrepreneur Evita Chu started calling around to see if she could source some of the yarn she buys from China and Europe in the US instead.
She stumbled upon a yarn mill in Wisconsin. “Oh wow, there are these mills and we’d never heard of them,” Chu said. “That’s the positive side.”
The negative?
The mill doesn’t have the technology to spin the yarn as finely as Chu requires. Her 14-person factory in Los Angeles produces knitwear for high-end US brands that demand top-notch quality. And the Wisconsin mill would only sell her 500 pounds at a time — way more than she needs. So, despite tariffs, Chu said her company, PDR Knitting, plans to stick with the mills she already works with in Italy and elsewhere abroad.
The Trump administration’s tariffs are forcing American companies that rely on imported goods to reconsider their supply chains. But even with the levies, many business owners are realizing that working with US factories isn’t feasible — there aren’t enough of them, costs are higher and many lack the capacity and capabilities of those in other countries.
That’s causing companies to stick with existing overseas suppliers while rolling out price increases to counter the tariffs. It’s a sign that the tariffs alone won’t be enough to spark a US manufacturing renaissance.
Lauren Greenwood, president of Chicago-based YouCopia, estimated that levies would make it roughly 20% cheaper to manufacture and sell her home storage and organization products in the US instead of China. But a string of additional costs would eat up much — if not all — of the difference.
YouCopia, which sells a popular bakeware rack, has to weigh the expense of moving existing manufacturing tools to the US or investing in new ones, as well as importing parts that aren’t made in the US. The company would also need to find local packaging suppliers and move warehouse storage closer to the new point of production. Higher US labor costs, a limited number of workers and the possibility of an economic recession add additional expenses and risks, Greenwood said.
Later Wednesday, the calculus shifted once again when Trump announced a 90-day pause on tariffs for most countries and a hike on Chinese goods. On Thursday, Trump said the rate stood at 145%. Greenwood’s calculation of a 20% gap further widened — but the abrupt shifts also increase uncertainty.
“How can you make major decisions and investments when you just don’t know if what’s true today is true tomorrow?” Greenwood said. “There’s no trust there.”
While she hasn’t ruled out domestic options, for now she’s sticking with China and considering the possibility of shifting some manufacturing to Vietnam.
Plastic Moldings
Megan Graham, founder of a company that sells refillable toiletry bottles, said she’d “love to make our products in the US.” But after researching options for her brand, Ries, which sells products in Sephora and the Container Store, she’s likely to keep manufacturing in China.
That’s because China makes most of the world’s moldings that are injected with molten plastic to give shape to household storage products and other items. To produce her bottles in America, Graham would need to ship giant, custom steel moldings worth $80,000 to the US. In addition to the high cost of shipping, there’s potential for them to be damaged en route and the only people qualified to repair the moldings are in China. Production would have to be paused during transit.
It would also be a permanent move: Chinese trade rules would prevent her from sending the moldings back to China, she said. A lack of subsidies and tax incentives further dissuades her from making a move.
“It feels like the point of the tariffs is not to help businesses, it’s not to invest more in the US — it is to fill coffers,” Graham said.
The Trump administration has acknowledged the tariffs might have short-term negative effects, but says they will ultimately benefit the US economy by forcing companies to relocate manufacturing in the US.
‘Major Undertaking’
Some companies have succeeded in bringing production to the US — but it’s a lengthy process.
Vacane Home Concepts Inc., which makes storage and organization products for big-box retailers, is opening up a plastics molding factory in Salisbury, North Carolina. The company, which is headquartered in Ningbo, China, has been working since 2022 to get the facility running.
“Building a factory in the US is a major undertaking,” said Eric Greathouse, Vacane’s director of marketing and sales for North America.
Most US plastics factories make large plastic tubs, like those sold by Home Depot Inc. and Lowe’s Cos., but aren’t as adept at manufacturing with high-quality PET that requires more precise molding, Greathouse said.
Production at the 100,000-square-foot factory will begin by July and create 40 jobs over the next several years. Initially, it will account for 5% of the company’s total production. The original plan was to increase that to 10% within two years, but the tariffs have accelerated that time frame. The factory “puts us in a very unique position,” Greathouse said.
PDR’s Chu hopes that American manufacturers will expand their capabilities. She sent the owners of the Wisconsin mill documents on the technology that she says is commonplace in other countries.
“You guys need to be competitive in this industry,” Chu said she told the owners.
