US tech decoupling from China faces steep costs as domestic manufacturing lags

Rajat Bhageria built his robotics company on a simple principle: find the best parts at the lowest price. Seven years into running Chef Robotics in San Francisco, he's learning that principle no longer applies. The robot arms his company sells to food manufacturers—machines designed to automate the assembly of ready-made meals—have always relied on Chinese components. China's ability to produce parts cheaply and at enormous scale made it the obvious choice. But the Trump administration has begun systematically restricting what American companies can source from China, and Bhageria now faces a question his investors and customers keep asking: why are you still using foreign-made parts?

The restrictions are sweeping. In July, the Federal Communications Commission added power inverters and advanced robotics to its list of prohibited foreign-made technologies. The US has banned cars using Chinese software, imposed a 100 percent tariff on Chinese electric vehicles, and enacted similar tariffs on drones following an outright ban on new models in December. The stated goal is clear: protect national security by reducing dependence on Chinese systems and incentivize domestic manufacturing. But the policy is colliding with a stubborn reality. Decades of outsourcing have left American manufacturers unable to meet demand at competitive prices or timelines. Ben Armstrong, executive director of MIT's Industrial Performance Center, puts it plainly: "We just don't know how to make them in the US. So, there will be a learning curve, and during that learning curve process, the price will be high."

Bhageria discovered this the hard way when he tried to shift production of the plastic grabbers at the end of his robot arms from China to the US last year, as Trump escalated tariffs. He found it prohibitively expensive and discovered that many suppliers outside China simply lacked the capability to manufacture what he needed. "We will even talk to some really good machine shops in the US and they're like, 'We can't do this,'" he said. The challenge isn't unique to his company. Ford, the American automotive giant, drew criticism from the Trump administration this month for using Chinese electric car batteries made by CATL. Michael Murray, chief executive of Kopin Corporation, which makes optical components for military drones, spent more than two years relocating manufacturing of micro display screens from China to the US. The cost difference is stark: producing those components domestically runs about 25 percent more than Chinese manufacturing, though Department of Defense funding has offset some of the expense. Yet even with that subsidy, the economics are brutal. China can produce more micro displays in one week than the US can produce in a year.

The supply chain problem extends to materials America cannot easily replace. Gavin Kenneally, whose company Ghost Robotics makes industrial and military robot dogs, is scrambling to find new sources for rare earth metals, which China controls with near-total dominance. His company has already moved motor production to South Korea and sources neodymium magnets from Europe, but the raw material still comes from China—and a government ban takes effect in January. "It's an extremely difficult supply chain problem to solve in the short term," Kenneally said.

The human cost of these restrictions is beginning to surface in unexpected places. At the University of Illinois Urbana-Champaign, engineering professor Sayan Mitra said several courses rely on robotic arms, drones, humanoids and vehicles manufactured in China. Replacing Chinese humanoids with American alternatives could cost ten times more. Other drone options may not exist at all. "It's like we are trying to do surgery on a patient that is already on their feet," Mitra said. "If it is done in a very ad hoc, unpredictable way, it's going to slow down everything."

Saman Farid, founder of the industry coalition Robots for America, worries that the restrictions will expand faster than alternatives can be created. "In the time that it takes an American company to build their first prototype, a Chinese company may already be on version three," he said. The concern extends beyond specialized equipment. The FCC ban on mobile robots includes new versions of automated devices like robot vacuums, pool cleaners and lawn mowers—the vast majority of which are made in China. Jitesh Ubrani, director of consumer devices research at IDC, sees the outcome clearly: "Long-term, sure, that could happen. But that'll probably be very expensive, and so the US consumers end up just paying a whole lot more."

Bhageria is trying to get ahead of the problem by searching for alternative suppliers now, while his components remain unaffected by the bans. But he knows the restrictions will expand. "You can imagine what's the next shoe to drop, right?" he said. "Like, the next thing might be fixed robot arms." For now, his company's final assembly happens in the US. But the machine components that do the actual work still come from China. That gap—between where American manufacturing is and where policy demands it be—is the real problem. The government has decided the cost of decoupling is worth paying. American companies are discovering what that cost actually is.