With the possibility of China tariffs rising to 60%, designing your next product has become more complicated. You need to consider where components come from and how they’ll impact your costs. Let’s explore how you can adapt to these changes while maintaining efficiency and competitiveness.
Why China Remains Central to Manufacturing
Chinese components still dominate industries like electronics, batteries, displays, and solar panels. Their value and quality are unmatched. Even with increasing US-China tariffs, China remains a vital part of global manufacturing. I’ve depicted in a dedicated article why we are still far from moving out from China manufacturing.
However, things are shifting.The implementation of Section 301 China tariffs has reshaped global supply chains. When tariffs were at 25%, much of the supply chain stayed in China. But at 60%, assembly will likely move out of China quickly.
Can Manufacturing Return to the US?
Many hoped manufacturing would come back to the US, but here’s the reality I see:
- Costs in the US remain too high.
- Finding skilled workers is a major challenge.
Instead of returning, assembly is moving to countries like Vietnam and Mexico. Often, Chinese factories still manage operations in these new locations. I’ve written a dedicated article about viable alternatives to China manufacturing.
What Does “Made in Mexico” Mean?
To qualify a product as “Made in Mexico,” US Customs requires a significant portion of its value to come from that country. For electronics, this usually means assembling components, like mounting circuit boards, in Mexico.
But as tariffs rise, we may see stricter definitions. It’s becoming clear that some of these countries act as fronts for Chinese factories.
How to Design Your Next Product Amid Tariffs
If you’re asking, “How do I design my product in these uncertain times?” here’s what we’ve been doing at Titoma:
- Design and Optimize Architecture. We start by designing the product’s architecture in our Colombia design center.
- Refine Bill of Materials. Our partners in Shenzhen help us refine the Bill of Materials (BOM). Many Chinese components aren’t listed on global platforms like Digikey, so local help is critical.
- Build and Test Prototypes.Once the BOM is ready, we finalize the design in Colombia, build working prototypes, and test the firmware.
- Use Chinese Molds for Speed. We open injection molds in China because it offers the best speed and value.
- Pilot Production in China. We conduct pilot runs (EVT, DVT, PVT) in China. This ensures the 300+ components from 68 factories work perfectly together.
- Final Assembly Outside China. When the design is mature, we ship component kits, PCBs, and housings to Colombia for final assembly. We also use local test jigs and packaging to streamline the process.
- Move Molds for Long-Term Savings. For long-term production, we move the injection molds to Colombia. This helps us save on shipping costs and further localize the process.
Why This Process Works
I believe this is the only realistic way to adapt to the new US-China tariff environment:
- Pilot runs in China ensure all components work seamlessly at scale.
- Final assembly in Colombia avoids back-and-forth shipping between China and the new assembly site.
- Keeping all design work outside of China reduces risks of IP theft and unwanted modifications.
Many Chinese factories are also willing to adapt. They’d rather keep 90% of a product’s value than lose it all. To find a manufacturer in China, we wrote a dedicated article that might be helpful.
Final Thoughts on Navigating US-China Tariffs
The rise in China tariffs and stricter Section 301 China tariffs demand creative solutions. By leveraging Design for Manufacturing (DFM) principles and spreading production across regions, you can stay competitive without sacrificing quality.
This approach has worked well for us at Titoma. I hope it inspires you to rethink how you design and manufacture your next product. Let’s navigate these uncertain times together.
