Tariffs, Uncertainty Roil Manufacturing Sector

Tariffs and trade wars, global conflict and supply chain disruptions are making manufacturers nervous, according to the new State of Manufacturing & Supply Chain Report from manufacturing and supply chain services provider Fictiv.

As the report notes: “Since 2020, the supply chain has been in disarray, and the increasingly volatile supply chain landscape appears to be getting worse. The U.S. President’s stance on tariffs is setting the stage for greater disruption moving forward.”

The 10th annual 2025 report, based on a survey of 254 senior manufacturing and supply chain leaders (and conducted with Dimensional Research), reveals a growing sense of uncertainty driven by tariffs, trade wars, and geopolitical instability, the company says. However, the report also shows momentum in areas like onshoring, artificial intelligence (AI) adoption, and increasing reliance on digital manufacturing platforms.

“Concerns about tariffs and trade wars are clearly top of mind for manufacturing and supply chain leaders,” says Dave Evans, Co-Founder and CEO of Fictiv. “We're seeing a level of global uncertainty and supply chain disruption we haven't seen since 2020. However, the report also shows that companies are embracing new technologies and strategies to build more resilient and agile supply chains.”

You can download the full report here.

Key findings include:

• 96% of respondents are concerned about the impact of President Donald Trump's trade policies, and 93% believe trade wars will escalate in 2025.
• 77% report a lack of resources limits their ability to manage the supply chain effectively, and 68% prioritize onshoring as a key strategy.
• 91% face barriers to product innovation, and 86% report sourcing parts takes time away from new product introduction. However, 90% see digital manufacturing platforms as essential.
• 95% report that weather and climate events impact their supply chain strategy, and 91% have sustainability initiatives and governance in place.
• 87% report advanced levels of AI maturity, and 94% use AI for manufacturing and supply chain operations.

While many companies are prioritizing onshoring to the U.S. in response to these trends, the report also notes that nearshoring and offshoring remain robust. According to the report: “While it makes sense that more manufacturing and supply chain leaders desire a diversified manufacturing footprint, offshoring to China has increased to 39% (an increase from 36% in 2024). For the second year, nearshoring to Mexico has stayed at 46%, while offshoring to Southeast Asia (e.g., Thailand, Malaysia) has increased by 7 points. We anticipate these numbers will shift as tariffs on Canada, Mexico, and China are now a centerpiece of U.S. trade policy.”

Companies also reported difficulty in sourcing and production. According to the data, 49% reported challenges in sourcing high-quality options to manufacture low-volume builds (up from 43% last year), and 38% reported having limited manufacturing feasibility and design for manufacturing expertise in development (up from 33% last year).

“The biggest challenge facing many companies is bringing their prototype to mass production. Even if you have an excellent product, market demand, and a well-articulated go-to-market plan, it’s difficult to bring the product to market fast enough to remain competitive,” Evans said.

The time engineers spend on sourcing and procurement activities is also increasing. In 2024, 13% of engineers dedicated more than eight hours per week to these tasks. By 2025, that number grew to 19%, a 6-point increase, the report says, and 76% of engineers spend more than four hours per week on procurement. “This growing burden on engineering teams highlights the increasing complexity of supply chain management and the pressing need for more efficient, service and technology-driven sourcing solutions. In turn, this will streamline workflows to enable engineers to focus on higher-value design and innovation efforts.”

More companies are also turning to digital manufacturing and on-demand manufacturing strategies. 

On the AI front, the largest number of respondents using AI are doing so for inventory management applications (51%) and quality control/inspection (45%). The report also found that 41% of respondents are using AI for product design, and 29% are leveraging the technology for design for manufacturability (DFM).

“This is a critical year for manufacturing and supply chain management,” the report states. “Businesses that prioritize adaptability and continuous improvement will gain a significant competitive edge in 2025 and beyond. Companies will be well-positioned if they focus on building higher-performing, more resilient supply chains to navigate the road ahead.”

Fictiv presented the study in an interactive roundtable webinar on March 26. More info can be found here.

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