TikTok thinks tariffs are about $5 t-shirts, Xboxes, and luxury yoga pants.

Obviously, they’re wrong.

But how wrong are they?

Yesterday, I called up a founder in Hong Kong who builds 3D spatial software for robots.

Think 3D GPS for C-3PO.

What he told me:

Everyone thinks the tariffs are about jobs. Or trade. Or consumer goods.

They’re not.

They’re about robots. Chinese robots.

The real fear in Washington isn’t inflation. It’s not jobs going overseas. It’s not trade deficits.

It’s total irrelevance.

Here’s something to think about.

Jensen Huang Already Warned Us

At CES this year, NVIDIA’s Jensen Huang said the quiet part out loud:

“The next frontier of AI is physical AI.”

Translation: AI is dumb without robots.

If you’re not building embodied AI—machines that move, act, build, touch—you’re playing with toys. And China isn’t just ahead.

They’re racing solo:

• The world's biggest AI company before OpenAI was SenseTime—a Hong Kong firm focused on computer vision.

• DJI, also Hong Kong-based, owns 90% of the consumer drone market. 75% of the commercial one.

• In 2015, China’s industrial robot count matched the U.S. By 2023, every other robot sold was sold to China.

• Today, half of the world’s robots live on Chinese soil.

And the harshest truth? Large Language Models (LLMs) like ChatGPT are the least important component of where AI meets robotics.

Figure AI, one of the most important robotics companies in the US, recently terminated their partnership with OpenAI.

Why? LLMs, they said, are the least important part of their stack. In fact, it was holding them back.

What’s more important? Flexible manufacturing.

Consider:

The founder I spoke to said he once needed a very specific camera module for a robotics project. Couldn’t find a single Western vendor with the specs.

He went to Shenzhen: “They built it in under two weeks and shipped it to me for less than $1,000.”

100% impossible in America.

The West Forgot How to Build

A European company called Northvolt—founded by a former Tesla exec—raised $16 billion to make batteries from raw materials.

They couldn’t do it. Not even one.

Why? Because they had to import the cathode materials… from China.

One Chinese company controls more than half of the global battery market.

China controls 75% of rare earth materials—the guts of every chip, drone, and robot.

Meanwhile, America has no manufacturing left.

We outsourced it and now we’re stuck with an economy that’s great at monetizing memes but can’t make a cathode.

The U.S. Is Waking Up

The analogy that keeps coming up:

In the 1930s, the U.S. was where China is now—an emerging industrial powerhouse. Western Europe was the over-leveraged consumer.

We all know how that ended.

China doesn’t just want to make your toaster.

They want to build the toasters, the factories that make the toasters, the robots that run the factories, and the AI that manages the robots.

That’s the real blueprint behind “Made in China 2025”—a plan to dominate every high-tech frontier that matters: chips, drones, EVs, and yes… robots.

And what’s America’s response?

Tariffs.

Not as a tax. As a tourniquet.

The U.S. isn’t just slapping duties on cheap junk—it’s aiming straight at the lifeblood of China’s rise: the industries that power their future dominance.

That, says my founder friend, is what the tariffs are about.

Not jobs. Not T-shirts. But the machines that build the machines for the next industrial revolution.

Because if we lose that race, it won’t matter how good our LLMs are.

We’ll be brilliant minds without bodies.

And China will own the physical world.