Welascent's $100m gamble pays off in Texas factory amid US-China trade war

A Chinese copper company, Wellascent, has built a factory in Texas to produce copper flat wire for US clients. Despite US tariffs on copper imports from China, Wellascent's local production shields US customers from the tariffs, benefiting the company. This rare case of a Chinese company benefiting from US tariffs highlights the complexity of US-China relations and the mixed attitudes towards Chinese investment in the US.

A Chinese copper flat wire manufacturer, Wellascent, has established a factory in Texas, offering a unique solution to US customers amidst ongoing trade tensions. Despite the 50% tariff on copper wire imports from China, Wellascent's local production shields US clients from these levies, presenting a rare instance where a Chinese company benefits from US tariffs.

The Texas factory, located in Grand Prairie, is set to commence production later this year and aims to produce 3,000 metric tons of copper flat wire annually by 2028. This facility will serve major clients such as automaker Stellantis, safeguarding them from the 50% tariff on copper wire imports. While refined copper, the base ingredient, remains exempt from tariffs, the locally produced flat wire offers a significant advantage.

Wellascent's investment in the US plant is projected to reach $100 million over three years, with the facility expected to generate more than half of the company's overseas revenue within that period. This strategic move not only hedges against geopolitical risks but also capitalizes on the current tariff environment.

The decision to build the factory in the US was made in response to the uncertainty surrounding Sino-U.S. trade tensions. Initially, some US clients hesitated to purchase Wellascent's products due to concerns about stable supply. However, the local production has now turned the tariffs into a "golden opportunity" for the company.

While Wellascent's investment highlights a rare case of a Chinese company benefiting from US tariffs, it also underscores the ambivalence among US policymakers regarding Chinese investment. The example set by Wellascent could potentially serve as a case study for other Chinese firms considering investments in the US, should the trade relationship improve.

Chinese investments in the US, particularly in manufacturing, have been on the decline since the Trump administration's trade war. According to Cameron Johnson, senior partner at consultancy Tidalwave Solutions, the hostile attitude in Washington has been echoed in Beijing, where regulators encourage firms to avoid the US.

Wellascent's investment in Texas faced a temporary setback when a 145% tariff on equipment shipments to the US was imposed in April. However, a trade truce reached in May allowed the company to avoid a 60% cost increase and proceed with furnishing the plant. Both sides extended this truce by another 90 days earlier this month to facilitate negotiations.

If a trade deal is reached, Wellascent's example could pave the way for more Chinese investments in the US. However, the current environment remains complex, with mixed attitudes towards Chinese investment and ongoing trade tensions.

References:

[1] https://www.reuters.com/business/autos-transportation/texas-factory-gives-chinese-copper-firm-an-edge-tariff-war-2025-08-25/