‘The Impact On Manufacturing Will Be Significant’

Manufacturers have been feeling the uncertainty from President Trump’s first weeks in office, with policies changing overnight and the threat of additional tariffs still looming. What are industry leaders to do in order to prepare for a climate that is anything but sure?

Dave Evans, CEO of global manufacturer Fictiv, shares his take on how manufacturers can best respond to this immediate concern. Founded in the face of fragmented, slow, and unreliable supply chains for custom manufacturing, Fictiv built a digital supply chain to connect quality manufacturing partners—and now has operations centers across the U.S., Mexico, India and China.

According to Evans, above all, this year more than ever, manufacturers must be adaptable to all the challenges—and opportunities—facing them.

What is your near-term outlook for the manufacturing and supply chain sectors?

At a high level the near-term outlook for the manufacturing and supply chain sectors is a mix of challenges and opportunities. On one hand, economic uncertainty, geopolitical tensions and climate-related disruptions continue to put pressure on global supply chains.

Tariffs, trade conflicts and shifting policies—especially with pending tariffs on Mexico, China and Canada—could introduce further volatility. Additionally, labor shortages and rising costs remain persistent concerns.

On the other hand, technology-driven solutions are accelerating resilience and efficiency. AI, automation and digital manufacturing are playing a growing role in optimizing supply chain operations, improving forecasting and reducing risks.

Nearshoring and onshoring strategies are gaining momentum as companies look to increase supply chain security and reduce dependence on overseas suppliers. Sustainability is also becoming a more significant driver of decision-making, with many leaders investing in greener, more efficient supply chain models.

Overall, the sector is entering a transformative phase where adaptability will be key. Companies that embrace digital innovation, diversify their supplier networks and invest in resilience will be better positioned to navigate uncertainty and seize new opportunities in 2025 and beyond.

How will President Trump’s tariff plans impact them?

Given the pending tariffs, it’s clear that protectionism will be a big part of this administration’s platform—using trade and tariffs to drive an industrial boom in the U.S.

We’re likely to see economic and supply chain disruptions that mirror 2020. The circumstances are different, but the impact on manufacturing will be significant, especially for businesses that rely on a single region to manufacture products.

In practical terms, this means that prices on some consumer goods will increase, especially on imported goods and materials. Products like cars, electronics and clothing that depend on components or finished products that are subject to tariffs will cost more to produce and purchase.

Manufacturing costs will also increase, especially those dependent on countries targeted for Trump’s tariffs on China, Mexico and Canada. Manufacturers using tariffed steel or aluminum will pay more for materials. Higher production costs could reduce profits, discourage investment or force businesses to relocate production to avoid tariffs.

Developing a resilient, agile supply chain, focusing on building out strategic partnerships with multiple regions, or having outsourced partners that are already diversified will help manufacturers withstand these tariffs and escalating trade conflicts. Supply chain resilience will be the name of the game over the next four years.

Additionally, from an economic policy perspective, increased costs for manufacturers and consumers and the associated inflationary pressures could also lead the Federal Reserve to raise interest rates again.

What is your advice for how CEOs of manufacturing and supply chain companies can best navigate these uncertain times?

My advice is to have a long-term strategy to build resiliency into your supply chain. The first step is to diversify your regions, making sure you’re not locked into one geography—and therefore vulnerable to targeted tariffs. Diversifying globally gives you a plan of action to withstand any disruption and builds agility into your supply chain.

It’s clear that 2025 is going to be a hugely disruptive year for manufacturers. Whether it’s increasing costs, margins shrinking or funding drying up, without an agile supply chain, they’ll struggle to remain profitable.

Here’s an example: Let’s say you’re a U.S. company that makes products in the U.S. You might see corporate taxes decreasing and believe this administration will build competitive protections that leave you relatively unscathed. I’d argue that you’ll still have to grapple with problems like labor shortages, raw materials cost spikes and cost increases for components not made in the U.S.

Given current global conflicts or the labor issues at ports coupled with new executive orders, it’s clear we’re heading into a challenging era. You’re going to have all these compounding factors that will drive the supply chain, which is why you need effective strategies to withstand them.

In addition to diversifying and strengthening your supplier relationships, we have a five-point strategy to help companies mitigate tariffs:

First Sale: Businesses can reduce tariffs by using a lower value for imports since companies can use the price paid in the first sale. This allows the earlier sales value to be used in declaring customs value, as long as that sale can be documented as a sale for export to the U.S. and the importer meets all other custom requirements.

Tariff Engineering: Refers to the process of designing, manufacturing or altering a product in a way that legally reduces the applicable tariff. By engineering the product’s characteristics, such as its composition or assembly method, companies can qualify their products for a more favorable classification within the Harmonized Tariff Schedule—a system used to classify and define goods being imported or exported internationally.

Country of Origin: This involves manufacturing the part in a country with more favorable tariff impacts for that particular HTS classification.

Free Trade Zone (FTZ)/Bonded Warehouse: This involves establishing a staging location for parts or products to delay the actual import. It allows businesses to re-assemble or alter products to meet lower tariff designation.

Duty Drawback: This enables businesses to pay duty upfront. Once it’s re-exported outside of the U.S., businesses can file for duty reimbursement.

Making sure you have this level of technical institutional knowledge is critical. And if you don’t have that expertise, partnering with other companies that do will help mitigate tariffs and other supply chain disruptions.

If tariffs on Mexico, China and Canada roll out, it will be critical for businesses to be able to access multiple regions to find the most advantageous location for production. But this is only possible if they have pre-established sourcing in these regions. Failing that, they need to find a supply chain partner with already established regional infrastructure.

What’s in the works at Fictiv over the next year?

As I think about 2025 and beyond, I’m more bullish than ever about Fictiv’s role in the manufacturing industry. We’re coming off a record-breaking year of growth for the company, driven by the strategic expansion of our catalog of manufacturing capabilities, continued investment in our technology platform and unwavering commitment to our customers, employees and mission. Our vision and execution empower product innovators to create and launch products that make the world a better place.

Central to this effort is Fictiv’s continued investment in strengthening our U.S. manufacturing capabilities, ensuring customers benefit from high-quality, fast-turnaround manufacturing solutions closer to home. We’re well positioned to help customers navigate the renewed consideration for onshoring to the U.S. that’s about to be revealed in our upcoming State of Manufacturing Report this quarter. This is our 10th year conducting this valuable study, and we’re excited to share all the results.

I’ll point out that our strength isn’t just about one region—it’s about global reach. We’ve built a resilient global network with regional investments in the U.S., China, Mexico and India, ensuring we provide a comprehensive solution and regional optionality for customers worldwide. By investing in local infrastructure and talent in key manufacturing hubs, Fictiv ensures continuity, stability and exceptional service regardless of global challenges.

Here again, I’ll highlight the power of relationships, so expect to see some big partnership announcements in the months ahead. We also recently announced our first-ever U.S. Manufacturing Revitalization Summit, a private, two-day event featuring special sessions, activities and networking to deepen our relationships among our Fortune 500-class supply chain.

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