by Fang Shiqi

Since April, when President Donald Trump pledged to impose sweeping "reciprocal tariffs" on key trading partners, U.S. import duties have climbed to their highest level in decades. The move has added fresh uncertainty for global exporters and rattled U.S. consumers, who now face rising costs on a growing list of imported goods.

While the full inflationary effect of the tariffs has yet to set in, some American shoppers are already adjusting their plans. Unlike food or daily essentials, appliances are discretionary purchases—prompting some to buy early amid price concerns, while others wait to see if future exemptions or discounts might offset the impact.

Trump has positioned the tariffs as a tool to revive American manufacturing, particularly in sectors such as home appliances. But decades of outsourcing have left the U.S. market deeply reliant on imports, especially from China.

For Chinese manufacturers—the world’s top exporters of home appliances—the U.S. remains a critical market. Even as new tariffs push costs above profit margins, replacing the U.S. with a market of comparable scale remains difficult.

Smaller firms take the first hit

This latest round of tariffs is broader in scope and more punitive. China has been hit hardest, with cumulative duties now reaching as high as 245%.

"We anticipated tariffs, but not at this scale," said Zhou Yang, a sales representative at a small appliance factory in Foshan, Guangdong. His company, which relies on the U.S. for 60% of its sales, had to halt all American orders after rates jumped to 125%.

"Some clients rushed to ship before the deadline, but others pulled out entirely. One cancelled after paying a deposit—we're now stuck with the goods in our warehouse, hoping for a policy reversal."

At another factory in Cixi, Zhejiang, a U.S. buyer walked away from a partially completed custom order, forfeiting the deposit. "The margins were already thin. We’re salvaging what materials we can," said Lin Yuan.

To clear unsold inventory, many exporters have turned to livestreaming on Douyin and Xiaohongshu. "We’re liquidating, not selling," one streamer said.

The tariff impact extends beyond the U.S. Even Chinese factories producing overseas now face cost increases, as the 10% baseline duty still applies to re-exports.

"We can’t quote prices anymore—tariffs change daily," Zhou said. "Clients expect us to absorb the extra cost. We’re looking more to Europe, the Middle East, and Southeast Asia, but even there competition is fierce. Longtime customers are asking for price cuts."

Industry veteran Alin, who works across China and Vietnam, said many small Chinese firms are scrambling to relocate production. "They're asking where they can rent capacity short-term. Some are even considering local joint ventures."

But he urged caution. "Tariff policies are volatile. Southeast Asia is overcrowded and short on skilled labor, with rising wages, rents and logistics costs. It’s no longer a guaranteed low-cost option."

Larger players adapt with diversified supply chains

China’s top appliance brands, including Midea, Gree, Hisense, TCL and Haier, are less exposed to U.S. risk. Public filings show the U.S. accounts for less than 5% of revenues at Hisense and TCL.

These firms say they are shifting production across multiple regions to buffer against policy shocks, while doubling down on Belt and Road markets in Europe, Latin America, and Africa. They are also boosting domestic sales.

That strategy dates back to the 2018 trade friction, when tariffs were first imposed on Chinese air conditioners, fridges and washing machines. Since then, many Chinese firms have built or partnered with factories in Southeast Asia, and to a lesser extent in Africa and Latin America.

Still, the latest tariffs are reshaping the global production map. Southeast Asia, once the top relocation destination, is now subject to steep duties. This has sharply reduced the viability of transshipment routes.

Newer tariff havens like Turkey, Brazil and Mexico, are emerging. Mexico, thanks to the USMCA trade agreement, allows duty-free appliance exports to the U.S. Companies that previously shifted to Vietnam now find themselves at a disadvantage.

Hisense, for instance, has a plant in Mexico with an annual capacity of over 10 million TVs—enough to cover the U.S. market. "Our Mexico base can handle all U.S. demand. We’ve already stocked up in anticipation of policy changes," said a company spokesperson. Hisense currently has no plans to build a U.S. factory.

Haier, which acquired GE’s appliance business in 2016, remains the most U.S.-dependent of China’s home appliance giants. It holds a 24.5% share of the North American market, according to Euromonitor. Its stock price slumped to a six-month low following the tariff news.

Yet Haier is also the most localised. It operates 11 factories across five U.S. states, with an annual output exceeding 10 million units and local sourcing rates above 75%.

"Still, domestic production only covers 60% of our U.S. demand," said an insider. "Another 20% comes from Mexico and the rest from China. We’re now considering raising prices in the U.S. to cover higher import costs."

A structural test for the industry

Tariff wars rarely yield clear winners. Analysts warn the current duties will squeeze global appliance demand, especially for smaller-size TVs and mid-tier products.

"Price hikes are inevitable," said Liu Hao, an analyst at Discien, a consultancy focused on the TV and display supply chain. "About one-third of TVs sold in the U.S. will be affected, with smaller and mid-sized models bearing the brunt. Premium and oversized sets are under less pressure."

Song Liwei, an analyst at Yisen Consulting, noted that U.S. consumer confidence was already fragile under inflation and recession fears. "Tariffs further weaken spending power and dampen expectations," she said. "The market contraction may hurt more than the profit squeeze."

Chinese firms, however, have advantages. Most of the world’s appliance manufacturing still resides in China, and the U.S. cannot fully decouple.

"Top Chinese brands lead in cost-performance, design, and smart features. Their diversified layouts give them flexibility, and many have the financial strength to outlast this cycle," said Song.

Domestic brands also benefit from rising demand at home. Midea CEO Fang Hongbo told investors the company will push aggressively into overseas markets this year, improving delivery and boosting OBM (own-brand manufacturing) sales. Haier echoed the strategy: "Focus on innovation. Create long-term value."

In the short term, the sector faces falling orders, rising costs, and capacity shutdowns. But in the long run, the tariff shock could drive Chinese firms to shed their low-cost OEM image and grow into global consumer brands.

"This is a necessary transformation," said Song. "The tariff hammer may just forge a stronger Chinese appliance industry."