Advice for Manufacturers Navigating Tariff Increases

Plenty of experts, reporters and prognosticators spent the weeks following the 2024 U.S.  presidential election conjecturing about how the incoming Trump administration’s possible  policies would impact business. Amid all those articles, videos and podcasts pontificating  on what may or may not happen and how it could come to pass, I decided to wait until we heard something more tangible than campaign rally slogans. 

Just before Thanksgiving, we got some clarity on the tariff front with Trump announcing that  “he would impose a 25% tax on all products entering the country from Canada and Mexico,  and an additional 10% tariff on goods from China,” according to the AP.  Though there remains plenty of details and back-and-forths to come from this  announcement — for example, these promised tariffs would violate Trump’s previous trade agreement (USMCA) with Canada and Mexico — it’s clear that businesses depending on imports from outside the U.S., which includes most manufacturers, will see prices rise for the materials and components their production operations rely on.

In response to these pending 2025 tariff updates, Matthew Littlefield, president of LNS Research (an industrial transformation research and  advisory organization), noted five recommendations for manufacturers: 

• Recognize that the likelihood of supply disruptions and quickly shifting trade policies has dramatically increased in the last three weeks and doesn't look to be coming back down soon. 
• Embrace risk-based thinking and contingency planning, including identifying new  suppliers, altering product designs and relocating production to the United States.
• Confirm, short-to-long-term SKU level demand forecasts by region with your commercial teams. 
• Invest, if you haven't already, in supply network flexibility with digital twin and industrial AI technologies to support better SKU level decision-making for supply  network design, physical plant design and product design as well as supply chain planning and optimization.
• Start engaging/accelerating your capex teams, finance teams and EPC partner firms on expanding or moving facilities to the U.S., as “things are about to (potentially) get  real,” Littlefield said.

As an example of how some engineering services companies are positioning themselves to  help manufacturers navigate these developing cost and supply chain issues, manufacturing system integrator and custom automation system builder Wes-Tech Automation Solutions is highlighting its capabilities to help manufacturers  reshore operations. Wes-Tech said it is doing this not just in response to the new Trump  tariffs, but due to the generally heightened level of geopolitical instability and other  looming supply chain disruptors.

The areas of its consulting and engineering services Wes-Tech is promoting are:

• Operational continuity and risk assessments. Reducing risk always begins with  options and a contingency plan. Wes-Tech’s team assesses all dimensions of  industrial automation potential to provide a variety of options to help mitigate risk  and improve a manufacturer’s state of readiness.
• Process optimization simulations. Simulate and model customer processes to  provide detailed system performance expectations and build accurate forecasts  that inform confident investment decisions.
• Design for automated assembly. Provide guidance to ensure new product designs  are optimized for automation before moving them into the manufacturing process.
• Manufacturing operations assessment. Provide input into product design, process  development and plant layouts.

To further support reshoring across industry, Wes-Tech has also become a sponsor of the  Reshoring Initiative, a non-profit organization  dedicated to bringing manufacturing jobs back to the United States. 

“People may see a lower per-piece price of overseas parts and assume it’s the more  profitable option, but that’s not necessarily the case,” says Harry Moser, president of the Reshoring Initiative. “An accurate assessment requires calculating total cost of ownership (TCO), which takes into account many factors, such as freight costs, inventory burdens and  geopolitical risks. TCO comparisons for operations in China show that about 25% of imports can be reshored profitably. Well-chosen automation can drive that percentage higher.”