When Trump announced a 145 percent tariff on Chinese imports in April 2025, the shockwaves hit electronics manufacturing fast. U.S. buyers paused orders. Chinese exporters scrambled. Headlines predicted factory closures. But is that really happening?
Some factories are closing. But the bigger picture is more about shifting than shutting down. In the electronics world, many manufacturers are finding workarounds, rerouting goods, or moving final assembly to safer ground.
What’s Actually Happening on the Ground
According to a Wall Street Journal report, some exporters have reported a complete pause in U.S. orders since the tariffs took effect.
In Yiwu, one of China’s largest wholesale hubs, demand for electronics like LED gadgets, USB accessories, and handheld devices has dried up. Traders say U.S. buyers either stopped ordering or switched to suppliers in other countries.
In Zhuji, better known for textiles but home to many OEMs, one supplier reported a 30 percent drop in exports. For small firms making low-cost electronics, the 145 percent tariff is a dealbreaker. A 100 dollar product now lands in the U.S. at 245 dollars, pricing it out of the market.
The same report notes that in many factories across the region, American demand has nearly disappeared.
Are Electronics Factories Shutting Down?
Yes, but selectively.
Smaller electronics factories that rely heavily on U.S. orders, especially for low-margin goods, are either closing or suspending exports. Companies that built their business around one customer or one channel are being hit the hardest.
Larger OEMs and component suppliers are not shutting down. They are adjusting. Some are scaling back. Others are rerouting production, changing logistics, or focusing more on domestic and Asian markets.
Assembly Is Moving, Not Manufacturing
Most electronics components, like PCBs, lithium batteries, and display modules, are still made in China. But final assembly is moving.
Companies are setting up FATP operations in Mexico, Vietnam, and even Colombia. This allows them to reclassify the product origin and avoid the tariffs entirely.
For example, an IoT device may still source its core components from Shenzhen, but it gets assembled and tested in Mexico before shipping to the U.S. That is often enough to meet current customs rules.
If you’re thinking of switching assembly locations to reduce tariff exposure, it’s worth understanding how Trump’s Tariffs Are Reshaping Electronics Manufacturing.
Grey Routing Is Back
Some exporters are using a quiet workaround. Goods are shipped first to countries like Malaysia or Thailand, relabeled, and then forwarded to the U.S. This is called grey routing. It is not illegal in every case, but it is risky and increasingly common.
This method is especially used with high-volume, low-weight products like chargers, smartwatches, earbuds, and LED lights. These products are easy to relabel and harder to trace.
The Sectors Hit Hardest
In electronics, the factories most affected are:
- White-label accessory makers such as Bluetooth devices and chargers
- Toy electronics and novelty gadgets
- Small ODMs with one major buyer in the U.S.
Suppliers of PCBs, metal enclosures, and complex sub-assemblies continue operating. Many are watching closely to see if the tariffs expand.
It’s Not Collapse. It’s Recalibration.
Chinese factories are not collapsing. They are reshuffling.
Some are cutting shifts. Others are investing in automation to reduce their dependence on U.S. orders. A few are focusing on domestic buyers or exporting more to Southeast Asia.
Local governments in regions like Guangdong and Zhejiang are offering tax relief, small grants, and infrastructure support to help keep factories running through the shift.
Conclusion
So are China’s factories really closing?
Some are, especially smaller players in the low-end electronics segment. But for the rest, it is not shutdown. It is adaptation. They are rerouting, relocating, and revising how they build and ship products.
The tariff hit is real. But the response is not retreat. It is realignment.
At Titoma, we believe in designing electronics to stay portable, not locked into one country, one supplier, or one setup. That does not just protect you from tariffs. It gives you options when things shift, because they always do.
For a deeper look at what this means for your business, see How Trump’s Tariffs Affect Your Business in 2025.
