Five strategies for U.S. manufacturers to mitigate potential tariff impacts
U.S. manufacturers can mitigate tariff-related disruptions by diversifying suppliers, sourcing locally, reevaluating product designs, leveraging tariff classifications, and negotiating long-term contracts, with support from the Tennessee Manufacturing Extension Partnership's resources.
The following is an excerpt from the Tennessee Manufacturing Extension Partnership (TMEP), and provides manufacturers with guidance for how to navigate uncertainty in supply chain and tariffs.
“The U.S. manufacturing sector is facing increasing supply chain uncertainty due to possible tariffs on imports from non-U.S. suppliers. These tariffs can drive up raw material costs, disrupt supply chains, and create financial strain for manufacturers. However, businesses can take proactive steps to mitigate these challenges and maintain their competitive edge.
Five Key Strategies to Manage Tariff Impacts
- Diversify Suppliers
Expanding the supplier base beyond tariff-affected countries can help manufacturers reduce dependency on a single source and spread risk. By working with multiple suppliers, businesses can better navigate unexpected cost fluctuations and supply chain disruptions. - Source Locally
Shifting to domestic suppliers may help eliminate import tariffs and reduce shipping costs and lead times. While local sourcing may initially seem more expensive, long-term benefits such as increased supply chain reliability and faster delivery can offset costs. - Reevaluate Product Designs
Manufacturers can modify product designs to use alternative materials or components that are subject to lower tariffs or available from local sources. Collaborating with design and procurement teams to explore new material options can help lower costs while maintaining quality. - Leverage Tariff Classification Strategies
Some products may qualify for different tariff classifications with lower duty rates. Conducting a thorough review of tariff codes and working with trade compliance experts can ensure that manufacturers are paying the lowest possible tariffs within legal guidelines. - Negotiate Long-Term Contracts
Establishing long-term agreements with suppliers and logistics providers can help lock in prices and reduce exposure to sudden tariff increases. Additionally, bulk purchasing and strategic sourcing agreements may lead to cost savings.”
You can read more content from the Tennessee Manufacturing Extension Partnership (TMEP) on its website.
Also, check out the Supply Chain Risk Management Guide for strategies to navigate risks, optimize supply chains, and maintain business continuity
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