The Trump administration's approach to tariffs will affect global manufacturers, but measures put in place due to the COVID-19 pandemic might help get them through the uncertainty.
The new administration's tariff policies have been imposed and postponed on several countries and industries since January. It started with a 25% tariff on all goods from the U.S.'s closest trading partners, Canada and Mexico, as well as 10% on goods from China. Trump announced a pause on these tariffs until March, and tariffs on Canada, Mexico and China went into effect on March 4 -- with the tariffs on China doubling to 20%.
While the chaotic back and forth has thrown the manufacturing industry into a state of flux, there are strategies to lean on, according to Sam New, a supply chain analyst at Gartner.
"The advice that we're giving manufacturers is that they need to maintain a policy that focuses on optionality, which includes things like strategic redundancies and risk mitigation tactics," New said, adding that small to midsize manufacturers are especially at risk due to how susceptible they are to market fluctuations.
A key part for manufacturers is to diversify their supplier base while conditions remain unsettled, he said. However, the most important strategy for manufacturers is to undertake scenario planning exercises that include modeling and sensitivity analysis that can help companies consider different if-then scenarios.
"The critical things are thinking about, No. 1, what's your risk appetite if you're a manufacturer, and No. 2, what are the possible scenarios and their impacts," New said. "That's how you develop a plan for the uncertainty that results from ongoing policy shifts."
The positive news is that the recent shocks to supply chains from COVID-19 and other environmental or geopolitical disruptions have better prepared manufacturers for the current tariff instability.
According to Gartner's 2025 Tariff Volatility Survey published last month, more than 79% of 76 chief supply chain officers reported that they are equipped to deal with the emerging trade environment. A majority -- 53% -- also expressed optimism about the business conditions this year.
The current tariff-centered business environment is similar to the days of the pandemic, New said, but with one crucial difference: Manufacturers aren't starting from scratch on contingency plans, risk mitigation strategies and the effects of shocks to their supply chains.
"As they began to think about those, the theme emerged that having a robust strategy in place can become a competitive differentiator," New said. "If you're thinking about these things in advance and planning accordingly, you have a robust set of redundancies and decision alternatives that can model the impact of different scenarios. You can be light-years ahead of your competition."
Pandemic lessons
The small to midsize manufacturing market is the engine that drives the global economy, so it's key for these companies to be as efficient and effective as possible, according to Kevin Bell, strategic account director at Syspro, an ERP vendor that focuses on manufacturing.
The volatility of events such as COVID-19 created a subsequent locking and tightening of supply chains globally that taught many small to midmarket manufacturers to plan ahead, Bell said.
"It's become not a matter of if, but when, at this stage where change is the new constant," he said. "There's a few things that manufacturers should be doing -- and hopefully have been doing -- to mitigate these impacts."
Manufacturers need to make sure they understand their supplier landscape and diversify the supplier base so that they have options if a supply chain tightens or certain geographies become less efficient to do business in, Bell said.
"A big aspect of it is improving how manufacturers engage with their suppliers or multiple potential suppliers, to get a handle on things like if there are tariffs in this particular region, you have A, B and C options to source the same materials," he said. "It's maybe not as cheap, but you can make sure the supply chains keep running."
The Trump administration's tariffs are creating an environment for manufacturers similar to the pandemic, according to Dave Evans, co-founder and CEO at Fictiv, a digital platform provider for sourcing and producing parts.
"At the highest level, it's important that [manufacturers] know that this is going to feel like 2020 now," Evans said. "It's a completely different set of scenarios [from the pandemic], but the uncertainty and disruption is going to feel very similar to five years ago."
It's another way of saying that manufacturers can't control the business conditions they face, but they can control the response, he said.
Limited reshoring in the short term
One of the purported justifications for the new tariffs is to bring manufacturing operations and jobs back to the U.S. However, reshoring on a significant scale is not going to happen soon.
The conversation around reshoring was going on long before the current events, but the U.S. lacks the workforce readiness to make it a reality right now, according to New.
"The U.S. is not China, and we haven't spent the last couple of decades becoming the world's factory," he said. "We don't have the skilled workers, the technology or the production capacity that China has built over the last 20-plus years."
Reshoring or nearshoring should be included in any manufacturer's scenario planning, but they need to understand the viability and the challenges involved, Evans said. It's a discussion point among manufacturing leaders, but there's more talk than action right now.
"If you're looking at it as a real decision alternative, you need to understand the Capex that would be involved, the staffing requirements, technology consideration and so on," he said.
Reshoring of manufacturing is more of a long-term strategy, Bell said.
Doing nothing is not an option anymore, and you can't sit back and hope things go back to normal.
Kevin BellStrategic account director, Syspro
"A lot of businesses will be thinking seriously about reshoring production, but they're probably taking more of a wait-and-see approach to see how short-term or long-term these tariffs actually will be," he said. "There hasn't been a lot of guidance around that just yet."
Manufacturers are hoping that there's more predictability going forward so that they can start to make longer-term decisions, Bell said. However, for now, these companies can lean on lessons learned from the pandemic as well as have access to more tools such as AI, advanced analytics and supply chain collaboration to help them limit the effects of tariff disruptions.
"Small to midmarket manufacturers are using those types of tools more than they ever have, and they're much better positioned to absorb these shocks right now and continue to grow," he said. "But they will have to take action. Doing nothing is not an option anymore, and you can't sit back and hope things go back to normal."
Jim O'Donnell is a senior news writer for Informa TechTarget who covers ERP and other enterprise applications.
