* Manufacturer criticises erratic U.S. tariff policy

* Clients hoard products ahead of tariffs, then freeze

orders

* Beijing's forceful retaliation stabilises business

* Limited expectations seen for upcoming Trump visit to

Beijing

By David Kirton

DONGGUAN, China, April 6 (Reuters) - U.S. President

Donald Trump's tariffs sought to hurt Chinese manufacturing, but

for one electronics maker, a turbulent 2025 ended with a belief

that China is a location that is difficult to replicate - as

long as things don't change too drastically.

Agilian Technology, which makes products mostly for Western

brands, saw its U.S. orders - accounting for more than half its

revenue - frozen for months and clients demanded it set up

production outside China.

Tariffs brought chaos to many Chinese companies; the

country's official purchasing managers' index contracted for

much of last year, with April 2025 being its weakest reading

since December 2023.

But Beijing's retaliation - export controls on minerals and

metals that U.S. firms need and are difficult to source -

reduced the levies. In March, China's official PMI grew at its

fastest pace in a year.

This allowed Agilian, a $30-million-a-year business, to

recover and appreciate its foothold, which it sees as crucial

for growth - though it has pursued offshoring.

A recovery in China's manufacturing sector might surprise

Trump following the anniversary of his "Liberation Day" tariff

rollout, given that he campaigned on using levies to

reindustrialise the American economy and project U.S. power.

"The data confirms that Trump's tariffs indeed haven't

derailed the momentum that we've seen in China's manufacturing

sector," said Nick Marro, principal economist for Asia and lead

for global trade at the Economist Intelligence Unit. He added

that levies "resulted in a restructuring of trade linkages and

supply chains."

China's trade surplus for the first two months of 2026 rose

to $213.6 billion, official data showed, from $169.21 billion a

year earlier. And in 2025, China grew its trade surplus by a

fifth to a record $1.2 trillion - equivalent to the GDP of the

Netherlands.

But exports to the U.S. slumped 20% in 2025, hurting

manufacturers that rely on the market, said Agilian CEO Fabien

Gaussorgues.

Gaussorgues, speaking at his factory in the southern city of

Dongguan, wondered whether Trump would make a breakthrough when

he visits China in May.

"The best we can hope for is probably a pledge for both

sides to keep talking and maybe some type of framework to keep

trade tensions from boiling over like they did last year," Marro

said.

Economists and industry executives expect Trump's visit to

extend a detente between the two rivals.

He Yadong, a spokesperson for China's Ministry of Commerce,

said the two countries should implement what they agreed to in

previous meetings and subsequent rounds of talks.

"China has shown the rare earths (are) a leverage of mass

destruction," said Denis Depoux, the general manager of

consultancy Roland Berger. "It's a nuclear weapon of trade."

PREPARING FOR THE WORST

Today, Agilian executives view Trump's tariff policies as

guideposts for how to deal with future flare-ups.

In 2024, as Trump was rising in election polls, Agilian's

clients wanted to get ahead of tariffs and asked the firm to

ship products to North American warehouses. Other U.S. importers

had similar ideas and storage prices went "crazy," said Renaud

Anjoran, the firm's vice-president.

Shortly after Trump was re-elected, post-midnight calls from

"panicked" clients became frequent.

One customer with family in Penang, Malaysia, urged Agilian

to set up a production base there.

Agilian had set up an entity in India, but most clients

pushed back on operating there, worried about slow production

and customs delays.

"India takes time," Gaussorgues said. "It took us one year

to have the official company."

TRUMP TAKES OFFICE

After Trump was inaugurated, two tariff hikes on China

totalling 20% concerned clients, but they stuck around.

Then on April 2, tariffs on Chinese exports rose another 34

percentage points.

For Agilian customers, "this was a disaster" and many

cancelled orders. Soon after, pallets of goods piled up inside

the 12,000-square-metre (130,000-square-foot) Dongguan factory.

China retaliated. Escalations pushed the levies above 100%

on both sides before the end of the month. "Things were frozen,"

said Anjoran.

The company decided to go with Penang and found a factory to

partner with. It was preferred because it was removed from the

South China Sea, where military conflicts can't be ruled out.

Agilian also scouted industrial rental space in Dharwad,

India, and even looked at moving production to the U.S. But it

found supply chains there were incomplete, leaving it reliant on

tariffed Chinese components and higher labour costs.

PLAN B FAILURE?

By mid-2025, Agilian's India team found a 4,000-square-metre

industrial building and was discussing which products could be

made there. Embargo-like conditions with China made India more

palatable for clients as well.

But then a May Washington-Beijing deal removed most of the

tariffs imposed on China. In August, with the Dharwad factory

still not ready, Trump hiked tariffs on India by 50% to force it

to stop buying Russian oil.

But Anjoran pressed ahead: "We want to be a multi-country

manufacturer. Focus on the long arc of time."

Pre-production runs in Penang also started in the middle of

the year, with the team learning that "everything takes way,

way, longer" than in China.

TARIFF CLIMBDOWN

Through the summer, China's export controls exposed U.S.

dependence on materials processed almost exclusively in China,

squeezing autos, defence and other industries.

An October meeting between Trump and Chinese President Xi

Jinping brought tariffs down by 10 percentage points. By then,

Agilian's clients had stopped asking about levies and

offshoring.

Agilian said the second half of 2025 was its busiest ever in

terms of production hours, rising 29% from the first half. With

tariffs steep but acceptable, clients unfroze orders and placed

new ones.

Anjoran says if 100% tariffs returned, his U.S.-exposed

customers would freeze production and put shipments on hold.

Agilian will keep developing facilities in India and

Malaysia "as an insurance policy," Gaussorgues said. But the

falling cost and rising quality of Chinese components made its

base in Dongguan indispensable.

He hopes to grow the company's revenue 30% in the next three

years, though he fears Trump could get in the way again.

"I started in January saying, okay, this might be a good

year and then the Iran war started," he said.