Marching Off to the Trade War

Tariffs are starting to make everybody nervous.

I’ve written before about my very low opinion of the steel and aluminum tariffs put in place during the first Trump presidency (and maintained during the Biden administration). I was working for some automotive publications at the time, and while automakers clearly had a biased opinion on this, I was hard-pressed to find anyone at the time who was enthusiastic about them. Those tariffs didn’t punish China (we don’t import a lot of raw Chinese steel), didn’t affect manufacturers in countries like Vietnam who did use Chinese steel, and raised prices on a lot of U.S. manufacturers. 

 

This time around, there are more tariffs, higher tariffs and tariffs on lots and lots of goods coming in from friend and foe alike. The tariffs are also being implemented in herky-jerky fashion based on the willingness of different countries to address the demands of the administration, entreaties from specific manufacturers/industries, and whether or not President Trump is annoyed with any one of a number of world leaders. The tariffs are being levied on goods that we can produce domestically, and a lot of things that we cannot. And the fact that they are being imposed and then removed erratically (sometimes within 24 hours) is starting to bother manufacturers.

In March I received a report from Fictiv (a manufacturing/supply chain services company) that included results from a survey of business executives, and they are pretty unanimously worried about the effect tariffs are going to have on the market this year, along with ongoing concerns about global stability, supply chain readiness and climate change. According to the report:

• 96% of respondents are concerned about the impact of President Trump’s trade policies, and 93% believe trade wars will escalate in 2025.
• 77% report a lack of resources limits their ability to manage the supply chain effectively, and 68% prioritize onshoring as a key strategy.
• 95% report that weather and climate events impact their supply chain strategy, and 91% have sustainability initiatives and governance in place.

I expect manufacturers and suppliers will be in for a bumpy ride this year, depending on how long and how nasty these (in my opinion, unnecessary) trade battles wind up being. There was also some good news in the report, though. More companies are turning to digital manufacturing solutions and on-demand manufacturing approaches to increase their ability to respond quickly to market changes. 

They are also leveraging artificial intelligence (AI) to boost some operations, like inventory management. More relevant to our readers, the report found that 41% of respondents are using AI for product design, and 29% are leveraging the technology for design for manufacturability (DFM). 

Trade instability could have some other negative consequences, too. The report found that engineers were spending more time on sourcing and procurement than in previous years, and supply chain disruptions caused by these global trade dustups could make that worse. Hopefully, cooler heads will eventually prevail.