Experts say tariffs stall innovative development

Over the past year, tariffs have disrupted supply chains and stifled innovation across the United States, forcing many small businesses to abandon new product development and shift into survival mode. While companies pin their hopes on intervention from Congress or the Supreme Court, experts warn that political considerations may determine the fate of relief efforts.

The impact was starkly visible at this year's CES, the world's largest consumer electronics show, held in Las Vegas last month, where many companies did not have the new models that typically define the annual showcase.

"It's something we've heard from a lot of businesses, which is just everything went on hold," Daniel Anthony, president of Trade Partnership Worldwide, an economic research firm, told China Daily.

The uncertainty has deterred major investments and led businesses to downsize operations, reduce sales and cut employment, Anthony said. "It's challenging for small business owners who are not tariff experts. It's really been detrimental," he added.

Suvie, a kitchen robotics company that operates a frozen meal subscription service, exemplifies the widespread disruption. The company completely halted its research and development efforts in response to the tariff regime. Robin Liss, Suvie's CEO and co-founder, described 2025 as "unquestionably the most disruptive year of my career".

Before the tariffs took effect, Suvie had manufactured its robots in Suzhou, China, and experienced significant growth. Then everything changed.

"It (tariff) is anti-innovation. We're not introducing any big new model this year at CES," Liss said during a panel at the trade show.

When tariffs were announced in April of last year, the company's entire R&D operation ground to a halt. "We stopped innovating, we stopped our new product development … because all of those engineers had to move to Tijuana and to Hanoi and focus on building factories," Liss explained. "It's totally wasteful, millions and millions of dollars."

The electronics industry depends on a complex network of specialized suppliers that simply doesn't exist in the United States, Liss said.

The company faces a dilemma: assembling Chinese components in the United States is economically unfeasible because of high tariff rates. Relocating assembly to other countries provides no easy solution either, as those nations lack the necessary supply chains.

Suvie responded to US tariffs by establishing factories in Vietnam and Mexico, but the measures have also increased manufacturing costs there.

While acknowledging that reshoring parts of the US supply chain is "a great objective", Liss said that key inputs remain difficult or impossible to source domestically. The United States has limited capacity to produce components such as oven shelves and cabinets.

Manufacturing clusters

She pointed to China's manufacturing clusters as a key competitive advantage. Cities like Suzhou support vast networks of component makers employing hundreds of thousands of workers, creating an integrated ecosystem that cannot be replicated quickly in the United States. As a result, the company must continue sourcing many parts from global partners, particularly components made exclusively in China.

Anthony expected the disruption to persist for years as companies work to bring new product models online. In the meantime, businesses are earning less, paying more to produce goods and missing the sales increases that often accompany new product launches.

He emphasized the importance of congressional engagement and the potential impact of pending Supreme Court decisions on tariff authority.

"Everyone is hoping that someone else solves the problem," Anthony said.

"If you're a Republican member of Congress, do you want to draw the ire of the president if the Supreme Court is going to strike it down? So I think a big question on congressional engagement is going to depend on the Supreme Court's decision."

liazhu@chinadailyusa.com