We certainly saw industrial tariffs take center stage during President Trump’s first administration, and they once again became a major initiative during his first few months in office the second time around. As the Trump administration pushes for swift action on trade policies, manufacturers should prepare for substantial changes and their ripple effects in the future.
Whether you support Trump’s policies or not, staying informed is essential for today’s machine shop professionals, as these plans and actions directly influence costs, supply chains, and the competitive landscape of the manufacturing sector.
We caught up with manufacturing advocacy expert Omar Nashashibi to discuss the ever-changing nature of tariff policies and their implications for NTMA’s members.
The Expedited Approach to Trade Policies
While there was a learning curve in navigating the nuances of trade and tariffs during Trump’s first presidency, the current administration is well-versed in implementing tariffs. Even before taking office on January 21st, Trump signaled potential tariffs on Canada, Mexico, and China, prompting early reactions from these countries.
On day one alone, Trump directed various agencies to report back by April 1st on different areas related to trade, such as:
- Negotiations on the new NAFTA, the United States-Mexico-Canada Agreement (USMCA)
- Currency manipulation by other countries
- Existing trade agreements
- Potential new trade agreements with other countries
With so much action already taken and so many further plans in development, there’s no doubt that trade policies will continue to shift at an accelerated pace.
How Industrial Tariffs Affect Machine Shops
For manufacturing professionals, understanding these policies is critical. Here are some key takeaways:
1. Changes to trade agreements will affect supply chains.
With the renegotiation of USMCA on the horizon, manufacturers should prepare for updates to country-of-origin rules and minimum manufacturing content requirements. This potential change could impact procurement strategies going forward.
2. Consider how higher tariffs on Chinese goods may impact your business.
The Trump administration is reviewing Section 301 tariffs, which currently impose a 25% duty on 6800 goods and a 7.5% duty on 3200 imports from China. There is speculation that these tariffs may be expanded to cover all imports from China, which could significantly impact machine tooling and other critical manufacturing inputs.
3. Use trade policy to your advantage.
U.S. manufacturers can leverage tariff policies as a selling point for customers. OEMs who previously sourced parts from foreign suppliers may reconsider domestic manufacturers due to increased costs associated with tariffs. Take this opportunity in your marketing, pushing for reshoring due to the financial benefits and impressive production capabilities within the U.S.
4. Prepare for retaliatory tariffs.
Countries affected by U.S. tariffs are likely to impose retaliatory tariffs on American goods. We already experienced this with Canada’s proposed retaliatory tariffs, and this likely won’t be the last occurrence. While this could impact some exports, it also reinforces the need for investment in domestic supply chains.
Advice from NTMA: Adapt to the Changing Trade Landscape
With Washington at the center of trade decision-making, every business should evaluate the potential impact of these policies. Our industry is constantly evolving, with adjustments to trade and tariff proposals and other critical policymaking, and companies must stay agile. To do so, the NTMA team recommends:
- Strengthening relationships with domestic suppliers
- Investing in technology to ensure top-notch manufacturing efficiency
- Staying informed about machining news and upcoming policy changes
- Leveraging all available resources to ensure compliance
Knowledge is power. Understanding tariffs, supply chain shifts, and market opportunities will be crucial in navigating the ever-changing landscape of our industry. Stay updated, adapt your strategies, and position your business for long-term success in a rapidly changing global economy.
Plus, as an NTMA member, you have a community for support and expertise. If you’re trying to wrap your head around the latest policies and how they might impact your business, connect with our advocacy team and lean into your manufacturing network.