Strategic Responses to Tariff Shocks: A Comparative Study of Deep Localization and Regional Relocation in Supply Chain Internationalization

Abstract

In 2025, the U.S. tariffs on Chinese goods rose to 145%, leading to a 19.5% year-on-year decrease in Chinese exports to the U.S. This dramatic shift in the international trade environment is forcing Chinese manufacturers to re-evaluate their international supply chain strategies. If companies continue to rely on Chinese exports, the 145% tariff will render their products completely uncompetitive in terms of price; withdrawing from the U.S. market means abandoning one of the world’s largest consumer markets. This study uses Haier Smart Home and KUKA Home as comparative case studies to examine their differentiated paths in the face of tariff shocks: Haier achieved “deep localization” through cross-border mergers and acquisitions, while KUKA achieved “regional relocation” through greenfield investments. The study finds that the divergence between these two paths stems from differences in resource endowment, industry characteristics, and historical accumulation. This study provides a strategic framework for Chinese manufacturers to select internationalization paths aligned with their resource endowments. The proposed framework offers actionable guidance for Chinese manufacturers navigating trade uncertainties, emphasizing that path selection must balance short-term tariff avoidance with long-term supply chain resilience.