By Dustin Webber
Faced with global economic pressures, advancements in artificial intelligence (AI) and a new administration in the White House promising increases in tariffs, businesses are bracing for dramatic shifts in the manufacturing environment. Change and uncertainty are unsettling; as manufacturers, we must understand how these changes will redefine operations, workforce development and strategic investments.
Here are three manufacturing trends we are looking at in 2025.
Reshoring And The Impact Of Tariffs
While the possibility of imposing tariffs has sparked intense debate, their long-term implications are clear: they can encourage localization of manufacturing to mitigate high import costs. However, transitioning global supply chains will take time; reshoring will not happen overnight.
When billions, if not trillions, of dollars of goods are shipped, for example, from China to the United States, it takes a very long time for those goods to change course. Assuming the goods are already on their way to the U.S., we can expect a price floor – the price of goods will not fall, but instead will increase to mitigate the cost of the tariff.
In the short term, we will see a drastic increase in the prices of goods entering the U.S. if the tariffs go through. For instance, Mexico already announced a 15% tariff on textiles and up to 35% on finished apparel import, effective December 19.
However, in the midterm and the long term, those price increases will upset customers, and at that point, wholesalers will want to seek cheaper and more innovative solutions. When that happens, we may experience an increase in reshoring opportunities.
Can manufacturers try to reshore preemptively? Yes, but capital is required to prepare for reshoring opportunities. For smaller businesses, raising that capital could present challenges. While getting ahead of changing regulations is generally positive, it remains uncertain how price increases due to the tariffs will affect our economy, the actual amount of those tariffs, and how taxes will be structured.
Still, reshoring presents vast potential. States like New Mexico, Texas, Arizona, and California, which have access to labor, raw materials, and proximity to trade partners like Mexico — are poised to become reshoring hubs. Potential tariffs on Canadian imports could also drive significant reshoring activity for northern states, creating economic opportunities. One trend to pay attention to is immigration laws, which could have a tremendous impact on access to labor.
AI’s Role In Manufacturing
AI’s impact on manufacturing requires a multi-prolonged analysis. We know it will continue to optimize processes and decision-making — improving productivity, boosting supply chain efficiency, enhancing quality assurance, and leveraging robotic process automation (RPA) on the floor.
We need a labor force that is ready, willing, and able to educate themselves regarding AI or learn on the fly. AI is redefining the workers’ role – for the better. Despite the fear that AI is replacing human jobs, advanced technology is shifting the need for higher-skilled, higher-paying positions, such as programming and maintaining and managing automated systems. For example, while AI can now do electricians’ manual wire harness assembly, technicians’ roles can be upskilled to oversee quality control, testing, and design enhancements enabled by AI-driven automation.
However, preparing our workforces requires leadership, managers, and workers to rethink current processes and ensure educational programs are available. We are facing a shortage of skilled workers in the U.S. manufacturing industry; there are currently 2.4 million open positions. Investing in advanced trade skills, such as welding or electrical, in combination with employing AI and advanced automation, can help mitigate this ongoing challenge.
Beyond the workforce, we also need utility grids to support AI. Infrastructure readiness is essential for AI-driven manufacturing. These technologies demand substantial energy and data storage capabilities. Reliable utility grids and access to state-of-the-art data centers are essential for supporting AI at scale. Recognizing the urgency, on January 9 President Biden issued an executive order, opening up federal lands for construction of AI data centers.
Implementing AI in manufacturing comes with significant upfront costs, which can deter some businesses. Manufacturers must balance the cost of upskilling their workforce with the potential ROI of implementing AI into operations. A phased approach to adoption—coupled with parallel investments in workforce training — offers a viable path forward. Gradual integration using current infrastructure and processes enables manufacturers to capitalize on AI’s long-term benefits without incurring unsustainable financial burdens.
Increasing Investment In Environmental, Social, and Governance (ESG)
Manufacturers must align with evolving environmental, social, and governance (ESG) regulations and goals. In November, the IRS and the U.S. Department of Treasury increased the availability of clean energy credits and deductions. The new regulation allows state and local governments and nonprofits to participate in the direct pay provisions of clean Energy Credits. Before that, governments and nonprofit companies couldn’t take their share of credit for clean energy projects. This massive win for governments and nonprofits will help accelerate a rise in clean energy infrastructure, as they are now incentivized to invest in sustainable technologies and practices.
Manufacturing is abuzz with the consequences of tariffs. However, the situation surrounding tariffs is rife with uncertainty. On the other hand, we know for certain that AI is here. We can prepare for reshoring and global uncertainty by ensuring our workforce and infrastructure are AI ready. We can do our due diligence regarding site location, and educate our workforce and improve their skill sets. We can also take advantage of tax structures in place, such as the new regulations surrounding ESG. Taking these steps can help manufacturers navigate future challenges and seize opportunities.
Webber is a Founder of Revitalization Unlimited, a firm dedicated to preserving historically significant real estate and legacy industrial manufacturing businesses across communities in the United States. He has more than 25 years of experience in leading companies, working in various roles such as operations manager, project manager, legal advisor, and director of operations. He is passionate about recent AI advancements in technology and innovation. Dustin served as a Senior Attorney for the Internal Revenue Service’s Office of Chief Counsel, litigating some of the IRS’s most complicated tax cases. Dustin has received several awards and recognitions for his legal achievements, such as awards for exemplary service to the IRS, U.S. News & World Report’s Best Lawyers, and Thomson Reuter’s Texas Super Lawyer. Prior to joining the business world, Dustin served in the U.S. Army as a special operations soldier.
