Manufacturing’s New Risk Game for Site Selection

In the current political climate in the U.S., companies face significant challenges choosing manufacturing locations. The ever-changing Trump trade policies and tariffs have sown doubt and uncertainty around costs, currency fluctuations, regulations, and sourcing and sales strategies. Multinational firms, in particular, must carefully review their current and projected global operations to stay competitive.

At the time of writing, tariffs have been instituted, modified, re-instituted, and now paused for 90 days, with the exception of tariffs on China. A long-term — or even near-term — trade policy is practically impossible to predict, and the ensuing uncertainty hovers over many manufacturers and suppliers like a modern-day sword of Damocles. The U.S. auto industry offers a concrete example. For decades, automakers have relied on cross-border trade with Mexico and Canada, first under the North American Free Trade Agreement (NAFTA) and now under the United States-Mexico-Canada Agreement (USMCA), negotiated during the Trump administration. While manufacturing in the U.S. may avoid tariffs, it also brings significantly higher labor costs than in Mexico.

Read the full article from Area Development here.