China was a steady source of these investments, with Wisconsin businesses buying $1.4 billion in heavy machinery from the country last year, as well as $1 billion in electric appliances and a little less than a billion in electronic devices.

However, Wisconsin industries’ reliance on China could be hurt in the future by U.S. tariffs.

“On May 12, an agreement between the United States and China was announced that will temporarily reduce the tariff rate on Chinese imports [from 145%] to 30% for 90 days,” the report said. “The new rate is still higher than in past years, however, and applies to a broader range of products.”

According to the report, Chinese imports have already been falling for years.

The inflation-adjusted value of state imports from China has fallen by 37.3%, from $10.2 billion in 2018 to $6.4 billion in 2024.

The introduction of steeper tariffs on China by the President Donald Trump administration – even at 30% – could put not only Wisconsin’s machine industries in jeopardy, but Wisconsin residents themselves.

“When tariffs are imposed on goods brought into the country, the additional costs are either passed on to consumers or accounted for by businesses through cost-cutting measures,” the report said. “Evidence suggests that nearly the entire cost of the tariffs imposed in 2018 was passed on to consumers.”

Wisconsin Business Group founder John Schram said small businesses that don’t rely on China will not be affected as much and may respond to tariffs positively.

“With the implementation of tariffs, small Wisconsin businesses whose equipment competes with brands that come over from China will find that their equipment becomes much more valuable to the average consumer,” Schram told The Center Square. “It allows these smaller businesses to actually compete on an open market.”

According to Schram, Wisconsin businesses that don’t rely on Chinese parts could boom in the next year while businesses relying on China could have a harder time dealing with the effects of the tariffs. 

Nonetheless, Wisconsin could see a rise in domestic and local manufacturing, which is one of the goals of the Trump administration’s tariff increases.

“Wisconsin isn’t a huge metal industry, and a lot of the purchases from China are just raw material, so what we might see from a manufacturing standpoint is these parts being produced locally or farmed out to a state around us,” Schram said. 

NFIB Wisconsin State Director Luke Bacher said policies bolstering small businesses should be pursued to combat the economic uncertainty brought by tariffs.

“Wisconsin’s small businesses are the lifeblood of our state and local economies,” Bacher said. “We will continue to listen to our members and support policies that will help reduce uncertainty, like making the 20% Small Business Deduction permanent before it expires and results in a massive tax increase on Main Street.”