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Stanley Black & Decker Accelerates "China Exit" Strategy

The tool manufacturing giant sets an aggressive 2026 deadline to slash its reliance on Chinese sourcing to below 5%.

NEW BRITAIN, Conn., November 12, Stanley Black & Decker has formally outlined a timeline to drastically reduce its supply chain exposure to China, a move that serves as a bellwether for U.S. manufacturing trends. 

The world’s largest toolmaker announced plans to cut its U.S. supply sourced from China from approximately 15% in 2024 to less than 5% by the end of 2026. 

This strategic pivot is part of a broader $2 billion cost-reduction program designed to improve gross margins and insulate the company from geopolitical trade volatility.

From China to the Americas

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The company is not just leaving China; it is actively reshaping its global footprint.

• The Target: Reducing China-origin goods for the U.S. market to <10% by mid-2026 and <5% by end-of-year 2026.
• The Alternative: Production is being shifted primarily to Mexico, leveraging the benefits of the USMCA trade agreement and proximity to the U.S. market. This nearshoring strategy aims to shorten lead times and mitigate the risk of transpacific shipping disruptions.

Margin Math & Strategic Muscle

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EVP and CFO Patrick Hallinan emphasized that these moves are essential for achieving the company's financial targets.

• Margin Goal: The supply chain overhaul is a key lever in reaching a 35% adjusted gross margin.
• Cost Savings: The initiative contributes to a goal of cutting $1.5 billion from supply chain costs.
• Resilience: By diversifying away from a single dominant source, the company aims to "improve supply chain resiliency" against future tariff hikes or trade embargoes.

How One Giant Is Rewriting North American Logistics

Stanley Black & Decker’s public commitment to "decoupling" validates the "China Plus One" strategy as an operational reality, not just a boardroom concept. For logistics providers, this signals a long-term shift in freight flows:

• North-South Trade Boom: Expect increased demand for cross-border trucking and rail services between Mexico and the U.S. (Laredo/El Paso gateways).
• Transpacific Softening: A corresponding structural decline in eastbound transpacific ocean volumes for finished goods in the home improvement sector.

Why This Move Changes Everything

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This is a textbook example of "defensive supply chain design." Stanley Black & Decker is effectively paying an upfront cost (relocation) to buy a long-term insurance policy against trade wars. 

When a market leader moves 10% of its total U.S. volume out of China in two years, it creates a slipstream that smaller manufacturers will likely follow, accelerating the industrialization of Northern Mexico.

Key Signals to Track as the Shift Unfolds

The industry will be monitoring the company's quarterly reports in mid-2026 to see if the interim target of <10% is met without disrupting inventory availability for major retailers like Home Depot and Lowe's.