How to Navigate Tariffs and Their Impact on Manufacturing

Concerned About Manufacturing Tariffs’ Impacts? Here’s How to Adapt

In early 2025, the global manufacturing sector was hit with a seismic policy shift. President Donald Trump announced sweeping tariff increases that have already begun to reshape global trade. Now, American companies are rethinking their use of overseas manufacturing partners. If you’re reconsidering your strategy, we’re here to help.

Overview of the Manufacturing Tariffs

In February 2025, President Donald Trump targeted Canada and Mexico with a round of raised tariffs. It resulted in a 25% tax on exports from both countries to the United States and a 10% levy on Canadian energy. Additionally, he imposed a 10% tariff on goods from China to the United States in February.

On April 2, 2025, Trump enacted a broad 10% baseline tariff on all countries. These tariffs were set to take effect on April 5, 2025. He also imposed individualized reciprocal higher tariffs on the countries with which the United States has the largest trade deficits. Those manufacturing tariffs were set to take effect on April 9, 2025.

However, Trump then announced a 90-day pause on the tariffs. During this time, the 10% “baseline” rate would be paid, excluding China. At the time of writing*, tariffs for China have increased to 125%. Some products will be set to 145% because of a previous 20% levy for those producing fentanyl. But, the fees don’t stop there. China could face up to 245% tariffs on imports to the U.S. “as a result of its retaliatory actions.”

According to the New York Times, “The tariffs put a heavy burden on some of America’s biggest trading partners, including China, Japan, Germany, India, South Korea, Taiwan, and Vietnam.” If your business relies on manufacturing partners within these countries, you could see major changes to your profit margin.

How are Tariffs Impacting American Companies?

Several countries outside the U.S., most of all China, are major suppliers of raw materials and finished goods to domestic companies. In fact, the U.S.-China goods trade reached an estimated $582.4 billion in 2024. As a result, U.S. organizations are facing several disruptions to their supply chains and manufacturing strategies.

Lower Margins

Some businesses are reliant on Chinese goods like machinery and electronic components. Others rely on raw materials from China. There is an option to source these goods from other countries, but the prices may be higher. Either way, the manufacturing tariffs will impact margins and force businesses to increase their costs. According to Grassi, “This could lead to greater pressure on maintaining competitiveness, particularly for businesses with low-margin products.”

Supply Chain Rearrangement

While the shift in tariff strategy may result in lower margins for American companies, it will require a rearrangement of the supply chain and new pricing strategies. These organizations will need to look to new markets for sourcing.

New Pricing Strategies

Tariffs may cause inflated costs for businesses, which they either absorb or pass on to consumers. The New York Times noted that Stanley Black & Decker, Adidas, Hasbro, and Procter & Gamble have already increased, or are planning to increase, prices as a result of the tariffs.

Big price increases can hurt demand, especially in competitive markets. The same New York Times article noted that consumers are already abandoning some of their favorite brands over increased costs.

How to Mitigate Risks for Your Business

If your business relies on overseas manufacturing, it might be time to look to an American alternative. Founded in 1943, KAL Manufacturing has the expertise you need to get to market quickly — while avoiding tariffs. We have domestic sources for stainless, aluminum, and most brass and copper products. This reduces our reliance on foreign materials. And, we complete all of our manufacturing within the U.S., ensuring you avoid large levies.

We specialize in tight-tolerance CNC machining, precision sheet metal fabrication, and electro-mechanical assemblies. Our extensive capabilities and resources give us the flexibility to handle any part, product, or assembly. Whether you’re an OEM or a Fortune 500 company, we’re ready to help you with even the most complex products.

Want to learn more about what we can do for you? Reach out to our team for an initial consultation.

*This blog was written in April 2025 and reflects the manufacturing tariff landscape at the time.