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Factory shields its U.S. customers from 50% copper wire

tariffs

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Production to start later this year, reach 3,000 T by 2028

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Chinese investments to U.S. have stalled since Trump's

trade war

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Policymakers ambivalent whether to welcome Chinese

companies

By Amy Lv, Florence Lo and Shubing Wang

GANZHOU, China, Aug 25 (Reuters) - Chinese copper flat

wire manufacturer Wellascent's decision early last year to build

a factory in Texas was a hedge against geopolitical risks. Now

the investment is paying off as U.S. import tariffs boost demand

for its locally produced goods.

The company's 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 ( STLA ), from behind the safety of

Donald Trump's tariff wall.

The factory shields U.S. customers from the 50% tariff

imposed on copper wire imports, along with other semi-finished

copper products like tubes, although refined copper - the base

ingredient - is exempt from tariffs.

"A few prospective clients in the United States were

hesitating about buying our products at the very beginning, as

they were concerned Sino-U.S. trade tensions would make stable

supply uncertain," Hazel Zhu, a board member at Wellascent

Electronic, told Reuters during a tour of their factory in

mid-August.

"A factory in the U.S. means the copper tariffs have in turn

become a golden opportunity for us," she added.

Wellascent plans to invest in three years $100 million in

the U.S. plant, which is expected to generate more than half of

the company's overseas revenue within three years.

Wellascent's investment highlights a rare case where a

Chinese company has benefited despite U.S. tariffs designed to

counter China's perceived industrial dominance. But while the

investment achieves one of Washington's stated aims of bringing

industry to the United States, it underscores ambivalence among

U.S. policymakers about whether to welcome Chinese companies.

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.

In the solar industry, some domestic producers have voiced

concerns that Chinese rivals setting up factories domestically

benefit from subsidised supply chains in China.

Chinese investments, especially in manufacturing, began

tapering off after Trump's 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 U.S., he added.

"Anybody who is big and could be a target for U.S. or

Chinese governments is doing hardly any investment," Johnson

said. "They (Wellascent) got lucky in many ways."

Net stock of Chinese foreign direct investment in the U.S.

fell by $8.1 billion between 2019 and 2023, U.S. data showed.

Wellascent's Zhu said the company had no regulatory issues

with its Texas investment, winning approval from Chinese and

U.S. authorities.

Still, a temporary 145% tariff on equipment shipments to the

U.S. 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.

"The 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,"

Zhu said.

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.

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 U.S., Johnson said.

"Their 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."