Over the past weeks, most of my interactions with other people, be they friends, family, taxi drivers, friendly chefs, or people at my local market, have involved at least an allusion to the tariff wave sweeping the world.Discussion on tariffs has been a leitmotif worldwide.With the situation ever changing and new tariffs being launched and responses given, the news rarely leaves the pages of papers or our various other screens.
An extended trade war may loom.Many people, however, seem to believe that it will all blow over.But it’s unlikely that the US will drop all tariffs in all cases.
It is fair to assume that, however negotiations turn out, there will be a 10% tax on many goods imported into the US.This pales in comparison to many other tariff rates being bandied about, but it is nonetheless significant.One would therefore expect there to be a run on manufacturing in the US, renewed interest in machine tools for the US, lots of interest in tooling, tooling engineers, bridge manufacturing, and much more.
Weirdly, this is not the case.I’ve spoken to many providers of manufacturing services, supply chain experts, and people standing to profit from a US-based manufacturing revolution.Whereas in Europe, we are seeing a general run on trying to secure the local development of certain key military supply chains, we do not see this effort replicated elsewhere.
Scenario A.Is what most people seem to believe.As my good friend Max Bogue said, for many things, the tariff is not significant enough to affect changes.
For many products, the 10% increase will still make a China-based supply solution the most attractive.Many believe that a 125% tariff won´t be enacted for any significant length of time, since it would deplete US stocks and cause short term pain for retailers and manufacturers in the US.So they think that 10% will be what remains.
In this scenario, consumers will shoulder a 10% tax without it really helping US manufacturing, except for making US goods made with Chinese inputs more expensive.The general wisdom is that tariffs against Mexico and the EU will be lowered soon, also not requiring more adjustments in that sphere.Scenario B.
Is that for whatever reason, tariffs against the EU, Japan, Canada, and South Korea will remain higher longer than stocks last.This will, of course, be a boon to US manufacturers of Brie, Champagne, and Coffee.A tax on US consumers will also make goods manufactured in the US more expensive due to inputs such as chips from South Korea and the like.
Scenario C.Separately, tariffs on goods from Mexico could also remain high.Mexico and the US are, by and large, twinned economies with many things being jointly produced by both economies, with around $800 billion of goods going from Mexico to the US and $300 billion going the other way.
A lot of that is avocados, but around 50% is manufactured goods.A lot of that is US oil going into Mexican plastic to make Mexican car dashboards that then go into US cars.Tariffs may, in the long term, cause more components to be made entirely in the US, but in the short term, they will lead to more expensive manufactured end-use parts for US consumers and exporters while reducing demand for Mexican factories.
Scenario D.Is a combo between B & C, which would completely suck of course.Scenario E.
Is that tariffs will be kept high on China but reduced to 10% for everyone else.This could lead to the gradual increase, at higher prices to US consumers and manufacturers, of inputs and goods coming from places that are not China and do not suffer from the same tariff rate, but lower ones.More goods would be made in the US, but at higher prices, meaning that they would be less competitive globally than previously.
US goods will be reduced in quality, and there will be a rise in costs with higher unit costs, higher input costs, and less volume, making the US economy less competitive globally in manufacturing.Meanwhile, other economies that use Chinese inputs or buy Chinese goods will be at an advantage.Scenario F.
Is a combination of D & E, which would make things worse for the US.Scenario G.Is that the US will seamlessly build factories to make almost anything at home.
The 7.1 million unemployed people in the US will all find work.China employs around 200 million people in manufacturing, and 15% of its goods go to the US, exporting around $500 billion.So I guess they will have to make up the shortfall globally or suffer cuts to a whopping 2.74% of its GDP.
Meanwhile, worker wages in the US are sure to rise as will training for tooling engineers, injection molding machine operators, and sorting people.With worker wages rising in the manufacturing sector, pressure will be put on employers in the service sector. Workers will, of course, be able to demand higher wages due to the US worker shortage, and the prices of things like hamburgers will go up.With prices rising, wages will rise further still, since, of course, there will be tens of millions of new jobs available in manufacturing.
Unemployment will be low, inflation will be high, and labor productivity will be lowered significantly.Currently, labor productivity per hour worked is from $91 to $115 in the US.Patrick Dunne holding a mold 3D printed using the Titan pellet extruder system and used to cast metal pans.
Image courtesy of 3D Systems.Ultimately, of course, after 12 months of tariffs, one would expect the increased building of US factories.We would see the restoration of the supply chain beyond the military and in high-end goods.
It may take a while for lower-cost things, and perhaps for some items, even with a 100% tariff, they wouldn´t make sense to make.However much the US wants to make jute bags, ABS plastic, corks, glasses, glitter, ice cube trays, and forks, perhaps this may never happen.As much as I´d like to see a completely robotized US-based Barbie manufacturing line or for Super Soakers to be made in Texas, it may never happen.
But if it does, it would be a generational rise in working-class wages.Amidst the confusion and different scenarios, it’s clear that the implications are vast and unclear.There are a lot of feedback loops at work here, and my simple sketches of some very basic scenarios are by no means a true picture of all that can happen.
Generally, however, the picture is hazy.Many companies and entrepreneurs are used to thinking of macroeconomics and geopolitics through the lens of one event indicator or lever.For many, for example, “the stock market” and how a particular index is doing suffices as a proxy for the economic health of the world.
Events like Covid and 9.11 have focused people´s minds on singular events having wide implications.Now, what is happening is more akin to moves in combination.The Rube Goldberg Machine, which is the global economy, will, therefore, behave in unexpected ways.
3D printed molds and parts for small-batch plastic manufacturing.Rather than plan for contingencies, many firms simply freeze up or do not do any contingency planning.Most people seem to believe in Scenario A.
But, even that relatively benign scenario will have significant implications on certain goods, especially those imported and exported repeatedly before resulting in end products.I’m seeing very little work here being done by anyone on bridge manufacturing, contingencies, spooling up factories, and the like.We would expect service bureaus to be overrun by people looking to see if certain components can be made through additive manufacturing.
We’d expect a tonne of interest in making 3D printed tooling.We´d also expect a lot of people chasing old and new manufacturing lines and machines.But, as far as I can tell, we are not seeing much of anything happening in the contingencies.
So everyone is assuming that the tariffs will simply disappear.What is even weirder is that people seem to think that the world will snap back into place again, and nothing will have changed.But, of course, this will affect growth.
The tariffs build uncertainty and indecision, so we know that growth will be slowed, opening up a huge opportunity for the 3D Printing industry.In the case of some of the more troublesome scenarios above coming to pass, there is a demand to build manufacturing lines in the US.With the payoff period on construction of new factories being quite long and with the capital and time needed scarce, flexible manufacturing will grow.
Therefore, this is an excellent time to offer flexible manufacturing services, flexible production lines, and 3D Printed products.It will be important to explain what can be made at what volume and cost.Companies such as Endeavur3D and Jawstec should explain how their pricing and costings work to engage customers more clearly and weed out those cases that will never work.
I don´t believe that we will be making a huge variation in parts, but there could very well be many products that could work well in Additive.Slant3D and other desktop 3D printing services will also have to make it easier for people to obtain costing information at certain volumes while convincing people that desktop 3D printers will give them the quality they need.Other services, such as Merit3D, will have to clarify what parts work with their technologies since their cases will be more specific.
Generally, however, we can expect increased attention in bridge manufacturing if some of the worst scenarios take place.Even in the case of milder effects, we could expect people wanting to switch over production and do some limited production runs in the US in the interim.On the whole, whereas the overall tariff mess is super vague and confusing, there is an opportunity for the 3D Printing industry.
How large this opportunity is remains to be seen.But, I would recommend that firms in Additive put out marketing and specific guides to help manufacturers understand what kinds of parts can be 3D printed at what volume and cost levels.There should be a real opportunity there amidst uncertain times.
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