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Laurie Harbour Laurie Harbour
Partner

Tariffs are Not a Strategy: A Call for Action by U.S. Manufacturers

May 27, 2025
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There has been no shortage of uncertainty and chaos within U.S. manufacturing this year. As we look ahead, it’s clear: While tariffs may offer temporary relief to some manufacturers and challenges to others, they only represent one part of the solution. Tariffs are not a long-term strategy for U.S. manufacturing, particularly in the tooling industry. Manufacturers betting their businesses solely on tariffs ultimately will be losers. Success will not come from relying on external forces, but rather from a focus on strong business strategy and internal operational improvements.

Operational Excellence an Ongoing Priority

Operationally, the gap between the U.S. manufacturers and those in low-cost regions like China is real, but not insurmountable. Although we may never achieve Chinese pricing levels, we should ask ourselves: What should the gap be?  

Twenty years ago, I wrote an article explaining why OEMs were moving production of parts and tooling to China. While lower costs were a factor, the deeper question was: Why were we looking to China in the first place? At the time, many manufacturers across the supply chain were not reflecting on what they could control. Instead, they blamed emerging low-cost regions for taking their business. Since then, what had been a small cost gap has grown significantly.

Manufacturers must challenge themselves to be better, by continuously driving out waste, adopting new technologies and shortening lead times. In many cases, they have not yet reached their full operational potential. Closing that internal gap is critical to being able to capitalize on shifting global dynamics. Manufacturers need to be as good as they can be, to make the decision easier for OEMs and other customers looking to source domestically. Tariffs cannot be the cornerstone of a competitive strategy; efficiency must be.

Maintaining Strong Customer Relationships

It also is crucial to avoid bitterness or punitive thinking. Suppliers who have lost customers will only earn their business back when they can provide compelling value—not because of loyalty or obligation. Punishing customers or holding grudges through increased prices and lead times serves no one. Instead, the focus should be on making it easy for customers to return by offering shorter lead times, stronger relationships and competitive costs.

For example, several plastic processors recently have said that tooling costs have climbed roughly 30% during the past year, while lead times have doubled. The tariffs create a unique opening for U.S. mold builders to regain business. Now is the time to be cost-competitive and operationally excellent, to reestablish relationships that may have seemed lost. If shops are not competitive, they may find that while their customers may need them today, they quickly will shift their business to new sources to reduce costs and improve lead times.

Manufacturers must be realistic and recognize that they cannot beat China’s cost structure outright. Even with significant tariffs, cost sensitivity remains a primary factor in decision-making. Buyers will continue to seek the best overall value, and you must align with that reality.

Navigating the Current Climate

Leading manufacturers will not stand still. They must dedicate time and resources to understanding the shifting landscape and the impact that tariffs will have on their supply chains and their current and potential customers.  Do so by participating in webinars, consulting with advisors and actively educating your teams. Those who succeed will have taken a deliberate, informed approach to change. This includes carefully examining supply chains, and asking:

  • Is our supply chain healthy?
  • Where are the vulnerabilities?
  • What are the financial implications if adjustments are needed?

These aren’t easy questions, but they are essential to answer before making major moves.

Talk with your customers to understand the end-use of every component you supply and where it is being assembled. Then use this information to completely understand the landscape of the products you make and build contingency plans.

Engage with past customers, those that recently moved business overseas and those you may have quoted in the past. In today’s environment, there is no better time to have conversations about reshoring opportunities and domestic capacity. Proactive outreach and positioning can make the difference between growing market share and losing ground.

A Strategic Framework for Success

To navigate the manufacturing landscape and capitalize on tariffs, your business strategy must remain steady and grounded in fundamentals:

  • Data analysis. Understand your company’s data and make decisions based on what the data tells you.
  • Market intelligence. Stay informed about global supply-chain trends.
  • Sales engagement. Focus on your sales process, get out from behind the computer and visit your customers in person to sell.
  • Operational excellence. Continuously improve efficiency and lead times.

China is moving fast, and it will find a way to overcome the tariffs. Other regions, including Europe and India, see this situation as an opportunity. Tool shops from these regions are visiting potential U.S. customers and will gain market share if U.S. shops do not work on what they control. Shops must be proactive. This moment is not just about capturing a few one-time opportunities; it’s about building sustainable competitive advantages that can stand up over time—regardless of future tariff policies.

Move Forward with Purpose

Tariffs are neither inherently good nor bad. They simply are one factor among many.
The key takeaway for manufacturing: Take ownership of your own future. Through a combination of operational improvement, customer engagement and strategic discipline, manufacturers can position themselves not just to survive but to thrive in today’s complex global marketplace.

 

See also: Wipfli LLC

Technologies: Management

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