As the U.S. presidential election approaches, business leaders across various sectors are anxiously preparing for the possibility of another Donald Trump presidency and its potential impact on trade with China. For many companies, like KidKraft— a leading manufacturer of toys and outdoor play equipment—this scenario could bring profound changes to global supply chains and production strategies.
Mike Sagan, the Vice President of Supply Chains and Operations at KidKraft, represents one of many business executives facing tough choices. After President Trump imposed tariffs ranging from 7.5% to 25% on Chinese imports in July 2018, KidKraft began moving a portion of its production outside of China. Now, with Trump threatening blanket tariffs of up to 60% on Chinese imports, Sagan is poised to accelerate this shift even further.
“If Trump wins next month’s election, we’ll cut our China supply chain in half within a year,” Sagan said.
However, the pressure is not just limited to KidKraft. Dozens of companies reliant on Chinese manufacturing are bracing for an economic shake-up, with significant consequences for global trade, the Chinese economy, and U.S. consumers alike.
In the wake of the 2018 tariff increases, KidKraft began diversifying its supply chain by moving 20% of its production to countries like Vietnam and India. This move was part of a broader strategy to mitigate the risks of rising U.S.-China tensions. Currently, KidKraft has reduced its number of Chinese suppliers from 53 at the start of the year to 41.
“The writing is on the wall that it’s going to be difficult, no matter who wins the election,” Sagan explained. “The question is: Is it going to be extremely difficult or just difficult?”
While KidKraft has already made headway in reducing its reliance on China, Sagan acknowledges that shifting production comes with its own set of challenges. Costs in countries like Vietnam and India are about 10% higher than in China, and quality standards can be harder to maintain initially.
“Quality is one of the biggest trade-offs you make in the very beginning because it takes time to secure the sub-supply chain and find the right people,” Sagan said. “You really risk your integrity.”
Trump’s proposal to impose a blanket 60% tariff on Chinese imports represents a dramatic escalation in the trade war, a move that could have far-reaching consequences for businesses and global markets.
For companies still reliant on China, like Matt Cole’s furniture brand, m.a.d Furniture Design, the stakes are particularly high. In 2018, Cole explored moving production to Southeast Asia but found that he would still need to source 60% of his components from China. The logistics and inefficiencies of relocating production were as costly as the 25% tariff Trump imposed during his first term. However, with the potential for a 60% tariff looming, Cole is reconsidering his options.
“If Trump wins, I’m going to move as much product to the U.S. as I can before the tariffs go into effect, and then look into moving production to other countries,” Cole said. “I might be on a flight to Malaysia or Vietnam very, very soon.”
The threat of a trade war “2.0” is also causing uncertainty for Chinese manufacturers. According to a Reuters survey, of 27 Chinese exporters who rely on the U.S. for at least 15% of their sales, 12 are preparing to move production overseas if Trump is re-elected. Four companies, which currently have no foreign factories, said they would begin relocating if tariffs rise. The rest expressed concern over losing market access but had not yet made specific plans.
For Chinese exporters, the possibility of a 60% tariff would be devastating, cutting deep into profits that are already shrinking due to deflation and domestic economic challenges. As Zeng Zhaoliang, head of the cookware company Guangzhou Liangsheng, put it: “If it’s 60% tariffs, nobody can handle it.”
China’s role as the world’s manufacturing hub means that the effects of a second Trump trade war would ripple through supply chains far beyond the U.S. and China. Lance Ericson, President of GL Wholesale, has sourced goods from China for 30 years but has already lost 40% of his business since Trump’s first term. He’s now looking for suppliers in India, Vietnam, and Cambodia.
“The Indians are already raising prices by 10%,” Ericson noted. “It’s going to be bad for China. It’s going to be bad for me.”
Higher tariffs would increase production costs, which would inevitably lead to higher prices for U.S. consumers. Even if production is relocated to countries like Vietnam or India, the shift won’t be seamless. These countries are already seeing rising costs due to growing demand, and their capacity to replace China’s massive industrial base remains limited.
While certain industries, such as solar panels, electric vehicles (EVs), and batteries, have been singled out for tariff increases, other sectors could also feel the squeeze. Trump has specifically threatened to impose a 200% tariff on Chinese EV manufacturers like BYD if they attempt to sell vehicles in the U.S. from factories in Mexico. Meanwhile, countries like Indonesia and India are raising tariffs on Chinese-made products ranging from clothing to steel, adding more complexity to global supply chains.
The impact of these tariffs won’t be limited to Chinese manufacturers. Many Western companies that have historically relied on China for components or assembly will need to rethink their entire production strategies. “We’re building factories overseas not just because of the U.S. market, but to prepare for changes in the global landscape,” said Cheng Xinxian, an executive at Hangzhou Yongyao Technology.
While much of the focus has been on Trump’s aggressive trade stance, many business leaders are also preparing for a potential Kamala Harris presidency, should the Biden administration continue with a similar approach. Sagan from KidKraft expects Harris to confront China on trade issues, but in a less combative and more predictable manner.
“If Harris wins, our relocation efforts will proceed at a more considered pace,” Sagan explained. “We’ll still be moving out of China, but there won’t be as much urgency. The focus will be on maintaining quality and ensuring a smooth transition.”
For many companies, the key difference between a Trump and Harris presidency is the speed and scale of change. While both candidates are likely to maintain pressure on China, Harris is seen as more likely to work through multilateral channels and give businesses more time to adapt.
The potential for a second Trump term raises critical questions for China’s economic future. Analysts predict that a 60% tariff could reduce China’s growth by 0.4 to 0.7 percentage points in 2025. Chinese policymakers may respond with stimulus measures, export controls, or currency devaluation to mitigate the impact, but these moves come with risks, including capital flight and further trade tensions.
Larry Sloven, a long-time manufacturing expert in Asia, believes that China will try to resist Trump’s pressure. However, he warns that companies overly reliant on China are in a precarious position.
“If you’re not spreading yourself, you’re dead,” Sloven said. “You’re in great danger.”
Chinese exporters are hoping for a more moderate stance from Trump if he is re-elected, but there is little confidence that he would back down from his confrontational approach. Yang Qiong, an executive at Chongqing Hybest Tools Group, said her company would expand its facilities in Vietnam if Trump returned to the White House but would stay in China if Harris won.
As the U.S. election draws near, the future of global trade remains uncertain. For businesses like KidKraft and m.a.d Furniture Design, the next president could force dramatic changes in their supply chains, with Trump’s 60% tariff proposal serving as a potential tipping point.
