Podcast: What the latest tariff announcements mean for U.S. manufacturers

In this episode of Great Question: A Manufacturing Podcast, the IndustryWeek editorial team discusses the significant impact of recent tariff announcements, including a 10% tariff on all countries and as high as 70% on some, which could reshape the manufacturing landscape. Joining the conversation are editor in chief Robert Schoenberger; senior editor Laura Putre, who covers supply chains and leadership in the auto industry; executive editor Jill Jusko, who focuses on continuous improvement; news editor Anna Smith, who specializes in supply chains; associate editor Ryan Secard, who covers workforce issues; and senior technology editor Dennis Scomeca, who shares his perspective on manufacturing technology. The discussion will explore how these tariff changes might affect the industry and what manufacturers need to consider moving forward. The team will also examine strategies for navigating these changes in the evolving trade environment.

Below is an excerpt from the podcast:

RS: I’m curious to hear what you have to say about how this is going to affect our industry. Let’s start with you, Laura. Looking at leadership, this is going to be a huge challenge for manufacturing leaders. You know, we’ve been importing goods from China, Asia, or Europe for decades in many cases, and now we’re going to have to figure out some changes. Based on your conversations, how are people going to handle something as radical as a complete change in the environment for trade?

LP: Well, as you can imagine, our leaders are stressed. All the surveys show that sentiment is down on the economy, and they’re, you know, concerned about the tariffs to say the least. Some manufacturers I’ve talked to are setting up “war rooms” with key leaders from supply chain, manufacturing, and logistics to strategize as new developments arise. There are key changes happening even now—you know, today we heard that semiconductors are going to be exempted, and I’ve talked with manufacturers who are concerned about that. Things can change on a dime. So, get your key people together and have a physical or virtual space where they can discuss these changes.

Communication with suppliers is essential—together, you need to figure out which costs you can absorb and which ones will have to be passed on to the consumer. In addition to communication, see if there are places where you can diversify your supply chain both globally and domestically. Maybe for key components, you want to source from different locations, not just one. Also, manufacturers are looking at the low-hanging fruit where they might bring production back to the U.S. or add automation to increase production if the labor market is tight. Some low-hanging fruit in the automotive industry might include harnesses or filters—things that are less complex.

I’d also recommend staying on top of trends and problem-solving by being active in your industry organizations and talking to others in your industry and those adjacent to it.

RS: Yeah, we’re going to get into some of these individual strategies in a bit here. As I talked to some of our colleagues earlier, we were discussing the time frame for some of these changes. You mentioned low-hanging fruit, like increasing capacity to make a product you already sell domestically with a domestic supply chain. That can be done fairly quickly. But when you start talking about changing entire product lines, that can take months or even years of planning and investment.

LP: Right. I think some of the auto manufacturers with flexible production lines will be at an advantage if they can switch up their production more quickly. I’ve talked to some component manufacturers who, you know, said they’re able to bring production back. They make air compressors for both heavy trucks and EVs, and they can switch up that manufacturing on flexible lines. But manufacturers with less flexible operations might face more problems. Major retooling can take months—it could take six months, and installing new equipment can take up to a year. So, manufacturers are looking at whether they have the space and the tooling to bring production back.

RS: Moving on to you, Jill. We talked about this a little earlier as well—continuous improvement, Lean Six Sigma. You’re not going to be able to have a Kaizen event to bring all of your foreign manufacturing into the U.S. or completely restore your supply chain overnight. But that doesn’t mean there isn’t a huge role for continuous improvement to play as we go through these changes.

JJ: Right. You know, part of what continuous improvement is about is making do with what you have, but it’s also about improving what you have. So, as I mentioned earlier, back in April of 2020, I wrote that in times of crisis, that’s when Lean shines most brightly. I quoted a Lean practitioner who said, “Although Lean might seem fragile in crises because of low inventories, it’s actually quite the opposite.” And it’s the opposite because Lean thinking is about solving small crises and small problems daily, so that when a big problem hits, you’ve developed those mental habits of reacting, learning from your reactions, and building those reflexes. So, you’re in a better place to deal with outages and their consequences.

If ever there was a time to call on those reflexes, it’s now. Continuous improvement is all about problem-solving. Like Laura mentioned, it’s about building a community of problem-solvers. So, in this instance, those problem-solvers are your teams running your enterprises.

Practically speaking, what do these tariffs mean for continuous improvement? Well, it means a lot of things. First, it would be the worst time to fall back on firefighting as a strategy. That’s going to be a hard thing for some, but it does also mean making use of your problem-solvers—if you have them. If you don’t, develop them. Continuous improvement is going to play a role for manufacturers for whom these tariffs present an opportunity, as well as for those who are facing a crisis.