Podcast: What should manufacturers do to prepare for changing tariff policies under the new presidency?
Jeremy Tancredi is partner in West Monroe's supply chain practice. He has 24 years of experience in the industry and currently manages productivity improvement programs for large distribution clients. Dan Swartz is international tax services principal at Crowe. Over the past 20 years, Dan has worked in trade advisory, customs brokerage, and global logistics and specializes in duty recovery, duty minimization, and trade compliance risk mitigation strategies for Crowe clients. Gregory Husisian is partner at Foley & Lardner LLP. Gregory is chair of the firm’s International Trade and National Security Practice, focusing on both international trade and international regulatory issues. Jeremy, Dan, and Gregory recently spoke with Jill Jusko, executive editor at IndustryWeek, about what U.S. manufacturers can do now to prepare for changes to trade and tariff policies.
Below is an excerpt from the podcast:
IW: Given that we don't know a lot yet about when and how tariffs may be impacted by the new presidency, what should manufacturers be doing to prepare? What should they be doing now?
JT: I think the first thing that I would recommend, and something we're talking to our clients at West Monroe about, is really just don't take too hasty of actions right now. The thing I would recommend they do is take a hard look at their supplier base. It's fairly straightforward to think about your tier one suppliers who are going to be sourcing products directly from China or some of these other places and plan accordingly with those sources. But what we're telling them to do is really take a look at those tier two and tier three suppliers as well. Any tariffs that impact those suppliers are going to filter back to the end manufacturer consumer. So understanding where all your tier two and tier three sources are coming from is going to help you plan accordingly, and then you can take a look at potentially sourcing different suppliers from different areas that may not be as heavily impacted by the new tariffs.
GH: I would agree with all of that, with what Jeremy just said, At this point, the key things to do are understanding and risk planning. A key thing companies can do is pull your ACE data from the customs portal and make sure you have a good understanding of what your tariff risk exposure is and from which countries, particularly with regard to China and Mexico. Those two countries have to be at the top of the risk planning. China is a bipartisan source of angst. Nobody is really going to complain too much if President Trump increases trade tariffs, and he's already shown once that he could do it. He has the authority under section 301 to declare that China is not in accordance with its settlement for the last 40 tariffs. So on day one, he could literally increase those imports. Mexico is a potential target because in 2026, the US MCA is up for reapproval. So that makes that a potential source of higher tariffs, even if it's part of a threat to achieve other goals such as immigration. So the first thing is to understand your risk exposure. And the second thing is to start risk planning, beginning with China and Mexico. Then after that, looking to see what your exposure is for the rest of the world.
IW: I have heard some comments from manufacturers about what they should be doing in advance. Are you telling anybody that they should be moving up capital equipment purchases or robust scenario planning? It sounds like some of what you said. And it sounds also like making sure you understand your country of origin is an important component.