Guidewheel's Response To Rising Tariffs
The manufacturing industry is entering a period of uncertainty last seen during the COVID-19 pandemic in 2020. As the Trump Administration announced tariffs of at least 10% on all countries, manufacturers are left waiting to see how it will impact their day-to-day operations. There is still so much we don’t know yet:
Which of these tariffs are short-term negotiating tactics and which are intended for the long-term?
How will other countries respond to these new tariffs?
How will the US respond to any reciprocal tariffs imposed?
What we do know so far – domestic manufacturing is likely to be in higher demand now and in the future than it has in the past. Even taking into account the cost of material, rising costs of imported goods will give many US-based factories the upper hand in pricing vs overseas competitors. Now more than ever, US- based manufacturers will be best served by maximizing efficiency and production with what likely will be increasing demand.
What is the one action every manufacturer should take?
Manufacturing leaders should be preparing thoughtful short-term and long-term plans to share with your stakeholders and the rest of your team.
An official company stance is essential for clearly conveying leadership's vision and expectations to your board, team, and customers.
Regarding a topic that the world is monitoring closely, it’s wise to prepare and swiftly communicate to stakeholders a thoughtful short-term plan in addition to letting them know when you will share your long term strategy.
How much action should your short-term plan include?
This is going to depend entirely on your business. For a situation with so many moving pieces, there won’t be a recommended one-sized-fits-all solution. You, as the primary operator, know your business better than anyone and are best equipped to find the right balance of action and patience.
Those who are directly affected by tariffs that are likely to stick may want to move more quickly and assign a team to immediately build the best plan for your business with the information available.
We recommend staying on top of the latest news to build a well informed and up-to-date plan. Find trade publications or news outlets you trust, turn on alerts, and stay in the know.
Which type of manufacturing businesses are most likely impacted by the recent stance on tariffs?
Manufacturers whose materials come from overseas and are (now) subject to larger tariffs.
US manufacturers with numerous exports to countries imposing reciprocal tariffs.
What questions should your company plan address?
Regardless of how much you anticipate tariffs to impact your day-to-day operations, your plan should address each of the following questions:
What are the risks to our business with these changes? How do we mitigate those?
Are there opportunities for our business with these changes? How do we maximize these?
Where do we need to build resilience and optionality within our operations?
These aren’t easy questions to answer, even in the best of times, but organizations that dedicate themselves to finding solutions now will be better prepared to face issues as they arise.