Article first published in FORBES, 14 April 2025
The tariffs proposed by the new administration in the United States have sent shock ripples through the global trade community, and the economic implications are far-reaching. Higher costs for imported goods could lead to increased prices for consumers and potential disruptions in supply chains, particularly in industries heavily reliant on cross-border trade, such as automotive and electronics. But there is a way for businesses to address the upcoming impact of tariffs by adopting a strategic approach that confronts the immediate effects and seizes the opportunity to redesign and optimize the manufacturing processes. In short, it's time for a design rethink.
The lift, redesign and shift philosophy
Design—and just as important, redesign—is fundamental to a successful response to challenges like tariffs. Businesses must move beyond the "lift and shift" approach, wherein production is simply relocated from one country to another, to the philosophy of "lift, redesign and shift." Adding in the redesign component offers a more holistic and sustainable solution to the problem of creating a more resilient supply chain, as it adds valuable redesign of products and processes to align with the constraints and advantages of each target country. The approach also allows you to leverage the latest technologies and best-in-class greenfield solutions for manufacturing.
Three design-first approaches
By adopting a design-first mindset, businesses can create products that are both cost-effective and adaptable to changing market conditions. Three design-first approaches can help companies navigate the complexities of the new high-tariff landscape:
Design for domestic manufacturing
Creating products that can be efficiently produced within the home country not only reduces dependency on foreign suppliers but also takes advantage of local resources and capabilities.
Design for tariffs
Designing products that can be easily adapted to different tariff regimes might include adaptive, modular designs that allow for easy substitution of components to shift with tariff increases or designing products that can be assembled in multiple locations to take advantage of lower tariffs in those locations.
Design for localization
Putting localization first in design means focusing on products that meet the specific requirements of the target market. This process includes considering local regulations, cultural preferences and available resources.
How to execute tariff-conscious design
There are key elements common to all three of these design strategies. To mitigate the impact of tariffs, I recommend that companies engage in platforming and modularity, leverage the latest technologies and adopt best-in-class greenfield solutions.
Platforming and modularity
Platforming and modularity are critical elements of the strategic design approach. Platforming means creating a common architecture that can be used across multiple products, allowing for standardization and cost reduction—economies of scale, if you will. Modularity, on the other hand, involves designing products with interchangeable components that can be easily replaced or upgraded, or sourced from different locations. This two-part approach reduces complexity and enhances flexibility and scalability.
Start by identifying areas with the highest potential benefit from using platforming and modularity. Then, develop a strategy to optimize product design and manufacturing processes using these tools to create flexibility in choosing manufacturing locations.
Leveraging the latest technologies
By integrating Industry 4.0 technologies such as automation, artificial intelligence and the Internet of Things (IoT), businesses can enhance production efficiency and reduce their reliance on manual labor. Invest smartly in tech and embed it across the organization to achieve greater agility and help you adapt to changing market conditions and regulatory requirements.
Deploying best-in-class greenfield solutions
In some cases, bringing manufacturing back to the domestic country or relocating to a friendly trade country may be the most viable approach to the tariff issue. Turbocharge your re- or nearshoring efforts by setting up new greenfield facilities designed to meet the highest standards of efficiency and sustainability. By starting from scratch, you can implement state-of-the-art technologies and processes tailored to the specific needs of the new location. With thorough planning—including resource requirements, financial projections, feasibility assessments, etc.—you can ensure a smooth transition back to home turf and minimize disruptions to your operations.
In closing, the new tariffs certainly present headwinds for companies engaged in cross-border trade. However, by adopting this "lift, redesign and shift" philosophy, you can turn a potential crisis into an opportunity for growth and innovation. By redesigning products and processes, leveraging advanced technologies and deploying best-in-class greenfield solutions, businesses can navigate the new tariff landscape and even emerge stronger and more competitive.
