<\/p>\n
Chinese copper flat wire manufacturer Wellascent\u2019s decision early last year to build a factory in Texas was a hedge against geopolitical risks. Now the investment is paying off as US import tariffs boost demand for its locally produced goods.<\/p>\n
The company\u2019s plant in Grand Prairie will begin production later this year and expects to produce 3,000 metric tons of copper flat wire annually by 2028, serving clients such as automaker Stellantis, from behind the safety of Donald Trump\u2019s tariff wall.<\/p>\n
The factory shields US customers from the 50% tariff imposed on copper wire imports, along with other semi-finished copper products like tubes, although refined copper \u2013 the base ingredient \u2013 is exempt from tariffs.<\/p>\n
\u201cA few prospective clients in the United States were hesitating about buying our products at the very beginning, as they were concerned Sino-US trade tensions would make stable supply uncertain,\u201d Hazel Zhu, a board member at Wellascent Electronic, told Reuters during a tour of their factory in mid-August.<\/p>\n
\u201cA factory in the US means the copper tariffs have in turn become a golden opportunity for us,\u201d she added.<\/p>\n
Wellascent plans to invest in three years $100 million in the US plant, which is expected to generate more than half of the company\u2019s overseas revenue within three years.<\/p>\n
Wellascent\u2019s investment highlights a rare case where a Chinese company has benefited despite US tariffs designed to counter China\u2019s perceived industrial dominance. But while the investment achieves one of Washington\u2019s stated aims of bringing industry to the United States, it underscores ambivalence among US policymakers about whether to welcome Chinese companies.<\/p>\n
Lawmakers proposed removing tax credits from a Ford electric battery plant because it plans to use technology from Chinese battery manufacturer CATL, although the carmaker said last month it believes it will still qualify.<\/p>\n
In the solar industry, some domestic producers have voiced concerns that Chinese rivals setting up factories domestically benefit from subsidized supply chains in China.<\/p>\n
Chinese investments, especially in manufacturing, began tapering off after Trump\u2019s first term and have now stalled, according to Cameron Johnson, senior partner at consultancy Tidalwave Solutions. The hostile attitude in Washington is now echoed in Beijing where regulators are encouraging firms to avoid the US, he added.<\/p>\n
\u201cAnybody who is big and could be a target for US or Chinese governments is doing hardly any investment,\u201d Johnson said. \u201cThey (Wellascent) got lucky in many ways.\u201d<\/p>\n
Net stock of Chinese foreign direct investment in the US fell by $8.1 billion between 2019 and 2023, US data showed.<\/p>\n
Wellascent\u2019s Zhu said the company had no regulatory issues with its Texas investment, winning approval from Chinese and US authorities.<\/p>\n
Still, a temporary 145% tariff on equipment shipments to the US in April nearly derailed its plans. Zhu said the trade truce reached in May allowed the firm to avoid a 60% cost increase and proceed with furnishing the plant.<\/p>\n
\u201cThe sudden 145% tariff left us completely stunned, as it left us at a crossroad as for whether to reconsider the investment; luckily, additional tariffs were removed, allowing us to smoothly ship a second batch of equipment to the factory,\u201d Zhu said.<\/p>\n
Both sides extended that truce by another 90 days earlier this month to give negotiators more time to craft a deal that Trump says is not far off.<\/p>\n
If a trade deal is reached, the example set by companies like Wellascent could become case studies for other Chinese firms looking to invest in the US, Johnson said.<\/p>\n
\u201cTheir example was pretty unusual, but maybe, if the relationship gets a bit better, we might see more of it because there are test cases out there in the market.\u201d<\/p>\n
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