President-elect Donald Trump’s proposed tariffs could bring about a complex transformation for the manufacturing industry, and the timing couldn’t be more challenging: companies rushing to beat new tariffs will compete for already-strained logistics capacity just as US East Coast ports face possible labour disruptions in January 2025.
Different manufacturing subsectors will experience wildly different outcomes — electronics makers face potentially painful component shortages, while chemical companies might benefit from reshoring.
Small manufacturers will struggle with the transition costs while larger players can use this as a catalyst to rebuild their supply networks. The biggest winners won’t be those who simply move production, but those who use this moment to fundamentally redesign their operations with more flexibility and redundancy built in.
While we can’t predict the specific policies Trump will enact when he takes office in January, it’s clear that if his proposed tariffs take effect it will require a complete transformation of manufacturing supply chains. Supply chains that were built over decades around specific assumptions are at risk of becoming expensive and antiquated. These are the key factors that supply chain leaders need to take into consideration:
Component ecosystems: Take electronics — it’s not just about final assembly. When Apple makes an iPhone in China, it relies on thousands of small suppliers within a day’s drive who make tiny but critical components. Some companies are already taking a reshoring approach and transferring their factory assembly locations to avoid the tariffs. But, moving just the final assembly to Vietnam or Mexico doesn’t solve the underlying issue — those component makers aren’t there. Building these ecosystems domestically takes years.
Infrastructure mismatch: Much of the existing, modern infrastructure for ports, warehouses, and distribution centres was designed for a China-centric trade pattern. To accommodate reshoring strategies the infrastructure we need for increased Mexican trade or domestic manufacturing is different. Think rail capacity at border crossings or power grid capacity in new manufacturing hubs. We can’t rebuild this overnight.
Timing collision: The January 2025 timing of Trump’s term starting is particularly problematic. Companies normally use the post-holiday period to rebalance their inventory. To avoid the potential tariffs, now they’ll be trying to front-load shipments exactly when: East Coast ports might shut down (ILA contract expires 15th January); Lunar New Year disrupts Asian shipping; Holiday season backlogs are still clearing; New tariffs loom.
Size matters: Large manufacturers can absorb the expected supply chain transition costs and have the scale to rebuild supplier networks. But small and medium manufacturers often rely on Chinese suppliers for specialised components. They lack the resources to quickly find alternatives or hold extra inventory during the transition. This could force industry consolidation.
Hidden dependencies: Many manufacturers don’t fully understand their supply chain dependencies. A company might think they’re fine because they assemble in Mexico, only to discover their Mexican supplier gets 80% of their components from China. These hidden dependencies will create surprising disruptions.
This combination of factors means we’ll likely see a multi-speed transformation: Some sectors will adapt quickly (like apparel); Others will take years to transition (like electronics); Some may never fully move (like certain speciality chemicals). The companies that do best will be those that use this disruption to build fundamentally more flexible operations — not just moving production from point A to point B, but creating networks that can quickly adapt to future shocks. But this requires significant investment in technology, supplier relationships, and new capabilities. Not every company has the resources or expertise to pull this off.
