2025 was undoubtedly a tough period for manufacturers.
The majority of our struggles came from tariff wars between the US and, essentially, the entire world. In the NAM’s Manufacturers’ Outlook Survey Third Quarter 2025, respondents were asked to estimate the amount they paid in tariffs since the start of the year, and more than half of the companies said their tariff costs topped $250,000. About one in three paid over $1 million, and about one in ten saw those costs climb past $100 million.
It’s more important now, more than ever, to understand what potential problems your business faces if you wish to remain profitable and competitive.
Tariffs and Government Policies
The Trump administration has been using tariffs as a way to influence other countries, including some that are normally US allies.
Things had been tense for a while, but the big shift came in April 2025 with the Trump Retaliation Tariffs. Since then, tariffs have been put in place, paused, and sometimes just threatened, making it hard to know what to expect. For manufacturers who rely on global supply chains, this unpredictability is tough to manage.
This back-and-forth will probably keep going into 2026 and maybe even longer.
The best way to stay on top of how tariffs might affect you is to keep up with the latest updates. There are online tools, like the Trump 2.0 tariff tracker, that show which tariffs are in place or coming soon.
However, the government is pro-US-based manufacturing and has enacted a bunch of bills and acts to strengthen domestic manufacturing and industry.
One Big Beautiful Bill Act (OBBBA) Highlights:
- Companies building or equipping advanced manufacturing plants, particularly semiconductor plants, will get a 35% tax credit, up from 25%, to encourage more US-based manufacturing.
- Spacecraft factories and companies (like SpaceX, Blue Origin, Relativity, and Rocket Lab) can now be financed the same way airports are, enabling cheaper tax-exempt bonds.
- Rules are tighter when claiming the 45X manufacturing credit to close a loophole. A component is only recognized as sold if sold to someone else, and at least 65% of the materials used in that final product come from U.S.-made components.
- Companies that produce metallurgical coal (used for steelmaking) are now eligible for the 45X credit and can claim a 2.5% credit on their production costs.
However, even with these pro-manufacturing laws being enacted, the damage caused by the tariffs means implementing manufacturing software helps businesses respond to rapidly changing tariffs by providing real-time visibility into costs, inventory, and supply needs.
With purchasing, production, and materials data in one system, teams can quickly adjust sourcing, model cost impacts, and keep operations running smoothly even when policies shift without warning.
The Widening Talent Gap
According to research by Deloitte and The Manufacturing Institute, there could be as many as 1.9 to 2.1 million unfilled jobs in the manufacturing sector by 2030.
A problem currently being exaggerated by The Trump administration’s anti-immigration policies, as right now, the Center for Migration Studies report that immigrants hold about a quarter of production jobs. To keep up, many manufacturers are turning to AI and other technologies to make their production lines more efficient. But this creates new challenges, as older, more experienced workers often struggle to adapt to these automated systems.
The best way to address this is to invest in training programs for your team.
Train your team to use new technologies, such as cloud-based manufacturing ERP software, and prepare less experienced workers to step up as older employees retire. While training can be expensive, the need for skilled workers is only going to grow. Acting now will help you avoid bigger problems down the road.
The good thing about most software today is that it helps address the talent gap by providing an easy-to-learn, intuitive system that allows new workers to become productive quickly and helps older generations learn and onboard onto the tool.
Clear workflows, automation, and real-time data reduce reliance on veteran employees’ tribal knowledge, while cloud access supports training anywhere, helping teams adapt to modern manufacturing without needing deep technical expertise.
Trade Uncertainty Continuing
As already touched upon, the unpredictability of tariffs is one of the biggest factors contributing to trade uncertainty, as they disrupt supply chains.
According to research published by NAM, 78% of manufacturers are worried because trade policy has become a moving target that raises their costs, threatens their export sales, and makes planning incredibly difficult.
Other factors are also jeopardizing the global supply chain. According to research published by The World Economic Forum, the top three global risks are state-based armed conflict, extreme weather events, and geoeconomic confrontation. These events have ripple effects across a manufacturer’s supply chain.
Take, for example, the Russian invasion of Ukraine. 30% of platinum group elements, 13% of titanium, and 11% of nickel, all sourced from Russia, became unavailable, crippling the global supply chain.
Here’s where modern manufacturing software become essential.
Using manufacturing software will enable businesses to stay ahead of trade uncertainty by giving real-time visibility into materials, lead times, and stock risks.
Real-time forecasting, safety stock settings, and automated reorder alerts help teams react early to shortages or delays, and centralized data makes it easier to shift suppliers, adjust plans, and keep production moving despite global disruptions.
The Rise of Local-for-Local Manufacturing
The Trump administration is continuing its push to strengthen US manufacturing.
On December 1, the U.S. House of Representatives passed the Made in America Finance Act, which will double the Small Business Administration’s loan limit from $5 million to $10 million for small manufacturers.
This gives smaller manufacturers a chance to get more funding to grow their facilities, buy equipment, and train workers.
Microfactories are also likely to become more common in 2026.
These facilities use automation and digital tools, so they can quickly adjust production as customer needs change. This shift supports the growing buy where you make, make where you sell strategy, where companies source materials near their factories and produce goods close to customers. Making products closer to where they are used leads to shorter lead times, lower shipping costs, and stronger supply chains.
Manufacturing software supports local-for-local manufacturing processes and workflows by connecting inventory, production, and purchasing across multiple sites. Software like Digit makes this possible by connecting multi-location inventory, scheduling, and purchasing so local facilities can operate smoothly and independently.
The Digitalization of the Supply Chain
AI and real-time data are now essential for logistics, forecasting, buying, and making decisions.
Generative and agentic AI are enabling more accurate planning, while automation, robotics, and digital tools are helping manufacturers maintain agility amid labor shortages and fluctuating demand. Geopolitical tensions, shifting trade policies, and tariff uncertainty continue to complicate supply networks, leading many organizations to diversify suppliers, pursue multisourcing, or relocate production.
Unstable markets, inflation, and higher costs are making companies more careful about investing.
As supply chains get more digital, companies need to focus on cybersecurity and risk management. Fast e-commerce growth also puts more pressure on inventory, shipping, and customer service.
In 2026, we will see a greater focus on resilience, sustainability, and digital transformation, emphasizing that connected data, advanced analytics, and collaborative networks will be essential for building smarter, more adaptable supply chains.
If you want to get ahead of these challenges, you can use Digit, a software that helps manufacturers handle today’s and tomorrow’s biggest challenges.
Digit puts all these tools in one place. With up-to-date information on inventory, costs, and production, manufacturers can react faster to tariff changes, handle workforce shortages, adjust to supply chain issues, and support local operations. Instead of relying on spreadsheets, Digit connects the data so small and mid-sized manufacturers can move faster, see what’s happening, and stay competitive in 2026 and after.
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