Citing national security concerns, the U.S. government tightened regulations on foreign-made advanced robotic systems in July and August, imposing hefty tariffs on imported drones and parts. Drone tariffs will go into effect in September, with additional component tariffs to follow in 2027.
These moves are part of a broader U.S. effort to limit foreign technology in strategically important industries. The FCC’s list, enacted in 2021, initially targeted communications and surveillance equipment from companies like Huawei, ZTE, and Hikvision, but has since expanded to include foreign-made drones and, more recently, advanced robotic equipment.
The latest move comes as Chinese manufacturers have established a dominant position in both drones and humanoid robots, competing at prices that rivals in the U.S. and Europe have a hard time matching.
Taken together, the regulations pose a bigger problem for the global robot industry. As Chinese drones and humanoids become increasingly excluded from the US, where will the competition go next?
While the restrictions may protect parts of the U.S. market, they do not directly address China’s global manufacturing scale and cost advantages.
Industry analysts and executives who spoke to TechCrunch said the result could be a more fragmented global market rather than a complete split between the U.S. and China, with Chinese companies expanding into other countries while manufacturers from the U.S. and its allies compete in markets where security requirements are more important.
scale gap
Although the U.S. and Chinese robotics industries remain deeply connected, the two countries compete with very different advantages. Unlike semiconductors, robotics does not rely on a single technology that a country can easily control, said Ankur Saxena, investment director at TDK Ventures.
According to a report by Counterpoint, China dominates the world’s humanoid robot manufacturing, with global shipments reaching 22,000 units in the first half of this year, the majority of which were made by Chinese manufacturers. By contrast, U.S. companies operate on a much smaller scale, said Somen Mandal, principal analyst at Counterpoint Research.
According to Counterpoint, the world’s five largest humanoid robot manufacturers by shipment volume (AgiBot, Unitree, Galbot, UBTECH, and Leju Robotics) are all made in China, and together accounted for 86% of global shipments in the first half of 2026.
This advantage could be even worse. Lower prices have allowed Chinese manufacturers to use more robots and generate real-world data to improve their technology. Saxena said costs could come down further as production increases.
Mandal said Chinese humanoid manufacturers are also reducing costs by bringing more of the technology stack in-house and leveraging China’s existing manufacturing base. Unitree, for example, is developing more components in-house, and automakers like XPeng can leverage its chip and vehicle manufacturing experience as it moves into robotics.
“The United States is leading in cutting-edge AI, software, and semiconductor innovation,” Saxena told TechCrunch. “China leads in terms of manufacturing scale, supply chain depth and cost.”
This manufacturing advantage has allowed Chinese companies to lower the price of humanoid robots faster than their American competitors can match.
“We cannot approve a way around the cost curve. We can only build above the cost curve. The United States has not yet begun the 10-year investment that will be needed,” Saxena said.
Where will China go next?
The answer may increasingly lie outside the U.S. Even if Chinese robotics companies lose access to the U.S. market, Saxena said they still have a large domestic market and room to expand into other regions, especially in areas where demand for affordable automation is growing.
Chinese robotics companies are already targeting price-sensitive markets with severe labor shortages across Europe, Southeast Asia, Latin America and the Middle East, Mandal said.
Mandal expects humanoid manufacturers to follow a similar path to Chinese electric vehicle companies. In other words, the idea is to build scale domestically, expand into overseas markets, and ultimately establish local production. Countries facing labor shortages and declining populations could be early markets for humanoids, especially in manufacturing, where robots can take on repetitive tasks.
The drone market offers an early glimpse of what a more fragmented robotics landscape will look like. Benzion Levinson, founder and CEO of Virginia-based drone manufacturer Haven Aerotech, said the industry is increasingly fragmenting into two ecosystems: a U.S.-led market built around U.S.-made, NDAA-compliant systems, and a China-led market focused on low-cost, high-volume production.
Levinson said Western manufacturers are unlikely to beat Chinese companies in the low-end consumer drone market, which still has a significant cost advantage. Instead, the United States and its allies may increasingly compete in long-range autonomous systems for defense and critical infrastructure, where security requirements become more important.
Levinson believes the next competitive frontier will shift from the drones themselves to the technology that powers them and the equipment they carry. “The next battleground is who owns the next generation of energy and payload architectures,” he said, pointing specifically to battery constraints. As drone capabilities increase, battery limitations could make power systems a key point of competition, he added.
Agility Robotics welcomed the FCC’s decision in July, saying it addresses security concerns surrounding advanced foreign-made robots before they become deeply integrated into the U.S. market like the drone industry. The company also called for continued access to the tools and technology needed to advance robotics research, citing its humanoid robot, Digit, which is being designed and assembled in the United States.
A more regional robot market
“The alternative supply chain to China is not a purely domestic supply chain in the United States, but a diversified supply chain from allied countries,” Saxena said.
This could open up opportunities in other parts of Asia as well. Japan has decades of experience in industrial robots and precision manufacturing, South Korea has strengths in electronics, batteries and automobiles, and Taiwan is a major semiconductor nation. But there simply isn’t an alternative to China, Saxena said, given how deeply embedded Chinese components are throughout the global robotics industry.
Mandal said Asian manufacturers could emerge as a middle ground between low-cost Chinese robots and more expensive American products. South Korea’s Hyundai Motor Company, which owns Boston Dynamics, and Japan’s Toyota Motor Corporation are among the automakers investing in robotics, leveraging their expertise in vehicles, manufacturing and autonomous systems to develop humanoid robots.
Yang Fang of Beagle Technology, a California-based agtech startup that uses AI and robotics software to turn traditional farm equipment into autonomous machines, told TechCrunch that robotics is likely to become more regional as companies design machines to suit the labor needs, working conditions, and customers of their home markets. For example, Chinese robotics companies may focus on products suited to China and neighboring markets, while U.S. companies are likely to develop products for industries across North America, he said.
As a result, the two robot industries, one led by the United States and the other led by China, may not be clearly separated. If anything, this restriction may accelerate the emergence of regional markets. Chinese companies compete on cost and scale in many parts of the world, the U.S. and its allied manufacturers have an advantage where security requirements are most important, and Japanese, Taiwanese, and South Korean manufacturers are trying to hold space between the two.
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