By John F. Di Leo, Trade Compliance Trainer –
Nine years into this trade war, it is shocking but true that so many American businesses are only now fully committing to a re-shoring program.
Some thought they could just absorb the new tariffs, some thought the tariffs would be temporary, some thought a change in presidential administrations would cause policy reversals.
But this isn’t temporary. It can’t be, because the underlying reasons for it are not temporary.
The foreign non-tariff barriers to American exports remain in place, especially in Europe and the United Kingdom.
China continues to be our primary global enemy, a country bent on becoming a regional power (at least) by conquering multiple nearby nations (yes, starting with Taiwan R.O.C.)
China continues to abuse its American (and other!) customers as much as it always has, through intellectual property theft, currency manipulation, slave labor, and so much more.
The American manufacturing community continues to fall behind. Even though we are still a manufacturing powerhouse, we have lost so many industries that we are dangerously dependent on other countries – especially China – for key components in almost everything we produce, from appliances to cars, from toys to industrial machinery.
For these reasons and more, this trade war – in some form – will continue for the foreseeable future, with either rising tariffs alone, or with tariffs in combination with quotas and outright bans, regardless of which party dominates politically. Import controls, or at least import suppression, remains our foreseeable future, whether we support it or not, whether we want to admit it or not.
So what does this mean to our business community?
It means that even the latecomers to the concept of re-shoring are finally appreciating the need to get moving. First and foremost, to get out of their dependence on China, and Second, to start building a domestic vendor network as well, so they can escape their dependence on foreign sources entirely.
This isn’t easy. We’ve spent a hundred years dissipating our domestic manufacturing capabilities. We used to make everything we needed, every material, every part, and we no longer do.
Let’s think about what that means.
Let’s say your company assembles power tools here in the United States – drills, sanders, saws – maybe in a red state; maybe in a blue state (because different parties ruled those states a century ago when your company was born, and both parties believed in American manufacturing back then).
You never made every single component yourself; who could? Some parts you made yourself, and some you contracted with outside vendors to make for you. When your company was founded, you bought the motor, the power cord, the plugs, the trigger, the switches, the housings, the bits or blades, the boxes and accessories, all here in the United States, and assembled them in your plant.
Gradually, over the years, you found that nobody makes this or that part in the USA anymore. You found you had to buy the motor from Japan, the switch from Mexico, the bits from Taiwan, the control from Germany.
Then gradually, over the years, as China mastered their techniques of currency manipulation, slave labor, and more, they took more and more of those industries away from Japan, Mexico, Taiwan and Germany.
So now you buy all these parts from China, and you finally realize the danger (much too late), so your purchasing, engineering and finance teams are desperately struggling to find other foreign sources again, in Malaysia or Vietnam or the Philippines or Korea, and hoping against hope that at least some American companies can make some of the parts too.
You’re finding that the American manufacturing community is slow to respond to this need. There are new start-ups all over the place – yes, mostly in red states because the blue states refuse to produce enough energy or regulatory relief or tax breaks to make it possible. But even as the start-ups arise, they can’t move fast enough. You still need stopgaps in Vietnam or Indonesia or Cambodia for a couple more years, to avoid the higher tariffs on Chinese goods, until the (hopefully affordable) American providers are online.
Yes, the other countries’ products are a bit more expensive, and yes, the American products will probably be a lot more expensive. But far too late, you’ve finally had to admit to the reality to which you’d shut your eyes for decades: that in fact, all you’ve been doing by outsourcing to China has been to teach your next competitors how to steal your market from you. Those vendors are now selling competitive products to yours – at a lower cost so they can compete worldwide. You taught your vendors how to deliver the precision fitting, the smooth finish, the most appealing color or style or feel. And now they can undercut you.
So, as the desperation rises, and the pressure from their boards of directors gets more intense, American purchasing and engineering departments, and especially their New Product Development (NPD) departments, are rushing to move new orders to new vendors in new countries.
That’s good. High time.
But as always, there’s a problem:
When you rush, you miss things.
These manufacturers – thousands and thousands of them – are probably focusing on speed and quality, making sure these new parts from all these new vendors will work right, and not slow down production.
But there’s more to this business than speed and quality. There are regulations – Customs classifications, origin rules, package marking, free trade agreement analysis, SASO qualification…
Every time a manufacturer considers changing the sourcing of a part, there’s a host of things he needs to do.
Will the product still qualify for a CE Mark to be sold to Europe, or a UKCA mark to be sold to Britain? Will he need to notify his customers that the product no longer qualifies for Ex-Im Bank financing? Will there be royalty assists or tooling assists or customer-provided materials to declare to Customs, to ensure that there’s no violation of the Customs valuation rules?
Can he legally share the bidding documents with a new vendor, or will he need to wait for an EAR or ITAR license, to ensure that there’s no violation of the U.S. Export Controls? Will he need to change the artwork for his packaging, his gift boxes, the product’s nameplate or imprint or blistercard?
The list seems endless, and sometimes it is.
It’s tempting to blame our overgrown government for this, but it isn’t even just our government; it’s the governments of our trading partners too, in Europe and the Middle East and Mexico and Canada, that have additional rules that sometimes need to be refreshed when a product’s composition is changed.
As strange as some of these rules are, when viewed one at a time, most of them make sense.
The valuation rules are designed to ensure that all importers are assessed duties on a level playing field. The marking rules are designed to ensure that the end customer knows the origin of a product before he decides to make a purchase. The Export Controls are designed to protect national security, to reduce the proliferation of missile technology, and to fight the spread of chemical and biological weapons.
But how many importers, rushing single-mindedly to legally avoid these tariffs, have thought to implement a plan to concurrently manage these regulations? If they rush into bids or production before resolving these other regulatory issues, the compliance cost could be more than they save. Much more. Millions more.
If every importer had a robust trade compliance department, they would have some protection, but most companies can’t afford such a team (or don’t think they can, anyway).
So these problems are often discovered too late, after new and incorrect boxes have been printed, after unusable parts or finished goods have gone into production, after trade secrets or controlled technology has already been shared and a prior disclosure needs to be presented to the Customs, or to State, Commerce, or Treasury.
From a business perspective, the advice is simple: get a consultant and build a plan before you start.
But from a public policy perspective, the advice is more complicated: we need to help our business community somehow, and the best way is to enable them to skip that intermediate step (first moving from Chinese vendors to other foreign vendors, while waiting for American supply to develop), by supporting lightning-fast development of new manufacturing right here in these United States.
It took generations for the USA to lose so much manufacturing to foreign shores. We can’t wait generations to get it all back.
The federal government has cut business taxes and regulations considerably. Now it’s up to the states.
The states, counties and cities need to step up, and fight the crime and blight that scares new businesses away. They need to cut the property taxes, corporate income taxes, and mandates that render their jurisdictions unaffordable for new manufacturing.
Robotics and other modern equipment can eliminate the low labor cost advantages that foreign Low Cost Countries (LCCs) have long had over us. But taxes, red tape and crime remain as barriers to entry.
And that’s something that Washington DC can’t help with; it’s up to Springfield and Chicago, Sacramento and Los Angeles, Albany and New York City.
We need a unified effort to save American manufacturing.
Copyright 2026 John F. Di Leo. Used by Permission.