Austin Companies Scramble to Limit China Exposure as Trade War Heats Up

As the U.S.-China trade war drags on, Austin-based companies are scrambling to reduce their reliance on Chinese suppliers, but face significant obstacles in shifting manufacturing elsewhere. With few cost-effective alternatives and uncertain U.S. trade policies, many local firms are caught in a bind.

While businesses want to limit their exposure to China, hesitancy over relocating operations stems from a lack of clarity on future trade deals. Ongoing negotiations make it unclear where shifting supply chains will be financially viable, leaving companies hesitant to make significant moves that could backfire.

Adding to the tension, President Trump threatened steep new tariffs on Japan, proposing rates of “30%, 35% or whatever the number is that we determine.” His comments suggest frustration with Japan’s negotiation stance and a willingness to impose harsher measures than the current 10% tariffs. Experts warn Japan may be forced to retaliate, creating further trade instability.

“There is some risk of a U.S. tantrum that results in higher punitive actions by Washington this month,” said Kurt Tong, a former senior U.S. diplomat in Asia. “If that happens, Japan may have no choice but to hit back with its specific countermeasures.”

Trump reiterated he may stick to his self-imposed July 9 deadline for finalizing deals, signaling that countries could soon face a return of “Liberation Day” tariffs unless they reach quick agreements. Treasury Secretary Scott Bessent also warned that “recalcitrant” nations could face steep penalties if talks stall.

For Austin firms, this volatile environment leaves little room for planning, as the risk of rising costs and supply chain disruptions looms large. Company leaders are closely monitoring developments, hoping for clarity before making costly decisions about relocating operations away from China.