Recent months have been turbulent for retailers that rely on international supply chains and trade—which means nearly every retailer competing in today’s global world. A particular challenge faces firms that depend on factories and manufacturing agents in China for their products, because the increased tariffs and vast uncertainty that mark current policies have made overhead costs untenable and logistics unpredictable.

Historically, U.S. companies moved elements of their supply chains abroad in attempts to reduce costs, in that overseas factories often could produce products with lower overhead and inexpensive labor rates. Over time, many countries have developed product-specific manufacturing expertise and strong, supportive infrastructure for their supplier networks. Such developments are especially evident in China, which has leveraged such capabilities to enhance its economic power and global standing, though it is not alone in this pursuit. Vietnam, for example, has already overtaken China’s production rates for certain consumer products, like shoes. India has also become a popular source for large-scale retailers.

These sorts of supply chain adjustments have intensified recently, especially as the political relations between China and the United States have grown more contentious. At one point, China was imposing a 125 percent tariff on all imports from the United States, a rate that the United States matched while also threatening to raise taxes on Chinese goods up to 145 percent. Both countries ultimately walked back these extreme positions, coming to a temporary truce with reduced tariff rates: 30 percent imposed by the United States and 10 percent tariffs by China. Yet this somewhat reassuring agreement remains temporary, and it can be suspended by either side at any time. Considering the historically fraught relationship between the two countries, U.S. retailers realistically recognize that things might change again, so they may need to rethink the design of their supply chains, both to reduce their dependence on China and to find other locations that can supply them with the products they sell, at more affordable (and consistent) manufacturing costs.

Some already have done so. The fashion brand Steve Madden started moving its supply chain infrastructure out of China as early as November 2024. Almost half of its products were being manufactured in China at that point, but noting the Trump administration’s pre-inauguration promise to impose tariffs, the firm’s leaders proactively worked to find alternative production locations. Even before the first policies went into effect, Steve Madden had announced its plans to build factories in Mexico, Brazil, Vietnam, and Cambodia.

As noted, such initiatives are not limited to large corporations like Steve Madden. A relatively smaller furniture retail firm, run by Simon Lichtenberg, moved its entire supply chain to Vietnam in 2025, at a cost of approximately $20 million. Yet Lichtenberg regards the expense as an investment, rather than a loss, considering the ongoing unpredictability of U.S.–Chinese relations.

Discussion Questions

1. Which retail sectors seem to have been most affected by the U.S.–China trade negotiations? Are there sectors that remain largely unaffected?
2. Choose a specific retailer and its primary product. Which overseas country would be the best location for manufacturing that specific product? What criteria did you use to come to that determination?

Sources: Alexandra Stevenson, “Why Factories Will Keep Looking for Alternatives to China,” The New York Times, November 12, 2025; Ananya Mariam Rajesh, “Steve Madden to Cut Sourcing From China on Tariff Worries Under Trump,” FashionNetwork USA, November 7, 2024; He Huifeng, “How China’s Tech Transformation Is Putting the ‘World’s Factory’ in a Tough Spot,” South China Morning Post, March 21, 2026.