China’s Guangdong province, Hub renowned for its manufacturing expertise and efficiency. With a complex international supply chain, Igloo once relied exclusively on its Guangdong facility for critical hardware manufacturing. However, with the U.S.-China trade war still simmering, the company recently shifted some of its chipset production out of China. This decision aligns with a broader trend among tech companies that are diversifying their supply chains to minimize the risks of tariffs and geopolitical shifts.
Igloo’s story illustrates the complex dynamics facing companies operating in China, and it sheds light on the broader implications of the trade war for industries reliant on cross-border supply chains. The company’s Chief Operating Officer, Steven He, shared insights on these challenges, including the steps Igloo has taken to navigate the shifting landscape of global trade.
For Igloo, Guangdong was an ideal production base due to the region’s established manufacturing ecosystem, which is critical for high-quality hardware development. “Guangdong offers unparalleled expertise, from the ground up, in product development for hardware,” said He. Yet, Igloo’s production strategy took a turn in light of ongoing U.S.-China trade tensions that could disrupt global supply chains and, by extension, companies reliant on Chinese manufacturing.
One critical component that Igloo sources from outside China is the chipset—a crucial element in computers, digital locks, and other devices with embedded digital features. “We intentionally chose the chipset not to be China-based because of ongoing U.S. tariff issues,” He explained, highlighting the company’s proactive approach to mitigating future risks. Although Igloo currently avoids direct impacts from tariffs, the possibility of future import duties looms large in its strategic considerations.
The trade war between the U.S. and China, which began in 2018, has seen a series of escalating tariffs on goods exchanged between the two economic giants. In May, the U.S. administration announced it would increase tariffs on Chinese-made semiconductors from 25% to 50% by 2025, raising the stakes for companies like Igloo that rely on semiconductor technology. Additionally, several new tariffs came into effect in September, including a 100% duty on Chinese electric vehicles, a 50% duty on solar cells, and a 25% duty on essential materials such as steel, aluminum, and key minerals.
In response, Igloo decided to move a portion of its operations to Vietnam, joining other global companies seeking alternative manufacturing bases. This move also allowed Igloo to work more closely with Chinese-based partners shifting their operations out of the country to sidestep tariffs. “Most of our partners in China are also serving the U.S. market,” He elaborated. “When they started to shift the operations, we tagged along with their factory to move to Vietnam.”
The ongoing trade war, which has continued through two U.S. administrations, is poised to extend well into the next. Trade experts suggest that regardless of the outcome of the upcoming U.S. presidential election on November 5, Washington is likely to maintain its hardline stance toward China, a country it perceives as both an economic and geopolitical rival. Analysts predict that a potential second Trump administration would take an even tougher approach, with proposals for a 60% tariff on Chinese imports and across-the-board duties of 10% to 20% on all foreign goods entering the U.S.
According to a recent survey by The Conference Board, an NGO, over half of China-based CEOs expect worsening U.S.-China relations over the next three years. The survey found that more than 58% of the respondents anticipate shifting their investments or operations to countries like India, which is perceived as a safer, less contentious location for production and supply chain operations.
Despite these challenges, many companies remain committed to China due to its advanced manufacturing capabilities and well-developed supply chains. “Over 70% of CEOs told us they are actually investing more in China, despite the political climate,” said Alfredo Montufar-Helu, head of The Conference Board’s China Center.
Technology is expected to be a significant arena of competition between the U.S. and China, with both countries vying for dominance in this field. Montufar-Helu believes that technology will drive economic growth over the coming decade, meaning the sector will play a key role in defining national power. “Those key technologies that impact the economic power of an economy are being the subject of some of these restrictions,” Montufar-Helu noted, emphasizing the importance of innovation and design in addition to production.
For tech-driven firms like Igloo, this focus on innovation means balancing the benefits of China’s established supply chain with the risks associated with the trade war. As the global economic landscape evolves, tech companies face increasing pressure to navigate trade policies and adapt their operations to remain competitive.
Despite the growing trend of moving operations out of China, some companies, including Igloo, remain committed to their established Chinese manufacturing bases. Having spent almost a decade embedded in China’s supply chain, Igloo acknowledges the time and investment required to build and maintain a reliable supply network. “The supply chain landscape usually takes years to build up to its quality and also maturity, so I think we still continue to balance by tapping the China resources, as well as to continue manufacturing our own products overseas,” He explained.
Mr. Liu Ning, owner of Bolan Intelligent Technology Co., one of Igloo’s Chinese partners, echoed similar sentiments. His manufacturing company, located in Guangdong’s industrial city of Huizhou, has over two decades of experience working with U.S. firms. Liu’s outlook is optimistic despite the geopolitical tensions, largely due to his diversified customer base, which includes markets in the U.S., Japan, and Europe. “We have stable customers not just in the U.S., but also in Japan and Europe, so we are not worried,” he said confidently.
The ongoing trade war underscores the importance of strategic resilience and adaptability in an increasingly unpredictable global marketplace. For Igloo, this has meant diversifying production sites and choosing partners and locations that mitigate risks associated with the U.S.-China rivalry. The digital lock maker’s operational shift to Vietnam demonstrates the tactical adjustments that companies are making to maintain access to the lucrative U.S. market while sidestepping potential tariff penalties.
Yet, the broader question of U.S.-China trade relations remains unanswered. As November’s presidential election approaches, companies and investors alike are closely watching for signs of future policy changes. While a second Trump term would likely usher in stricter trade measures, a new administration could take a less confrontational approach. Regardless of the election’s outcome, however, experts believe that Washington will continue to scrutinize China’s trade practices closely, particularly in areas such as technology, semiconductors, and electric vehicles.
