The intricate web of current US tariffs is posing both challenges and opportunities for manufacturers in the eastern United States.
In recent years, shifts in U.S. tariff policy have directly affected businesses across industries—particularly manufacturing. These tariffs were created to strengthen domestic industries and improve competitiveness in global markets. For many manufacturers, however, the effects are deeply felt—through tariffs on steel, aluminum, electronics, and other critical inputs.
The imposition of tariffs has had a mixed impact on manufacturing operations in the eastern United States. On one hand, tariffs have increased the cost of imported raw materials, leading to higher product costs for manufacturers. This has been particularly challenging for small to mid-sized manufacturers who may not have the leverage to negotiate lower prices or the financial resilience to absorb the additional costs. In addition, passing these increased costs to long-term, loyal customers through increased product prices can be hard to implement.
Some manufacturers have found a silver lining, as the easing of competition from imports has helped them secure a larger stake in the domestic market. Still, the reality for many is difficult. Rising costs have squeezed profit margins and, more often than not, have forced manufacturers to make the tough decision to raise prices—an outcome that can weigh heavily on the relationships they’ve built with valued customers and communities.
Manufacturers in the eastern US have adopted several strategies to manage tariff-related pressures. One common approach is supply chain diversification—sourcing from non-tariffed countries to reduce dependency and stabilize costs.
Sourcing raw materials domestically has become an increasingly valuable strategy for manufacturers navigating today’s tariff environment. By partnering with U.S.-based suppliers, manufacturers can help protect themselves against the volatility of international tariffs, shorten supply chains, and improve just-in-time delivery capabilities. Domestic sourcing may also lead to better quality control, quicker response times, and stronger supplier relationships—all key factors in maintaining steady production and managing costs. In addition, it strengthens regional economies and builds resilience against global disruptions.
Another strategy is to invest in technology and automation to drive efficiency and productivity, helping offset tariff-related cost increases. Artificial intelligence (AI) is rapidly transforming the landscape of modern manufacturing, offering US manufacturers powerful tools to drive efficiency and innovation. As manufacturers embrace these technologies, they unlock new opportunities for growth, resilience, and long-term competitiveness in a dynamic global marketplace.
For accounting departments, tariffs introduce new complexities in cost tracking and inventory valuation. Increased raw material costs affect standard costing, variance analysis, and overhead allocations. Under US GAAP, inventory must be carried at the lower of cost or net realizable value (LCNRV), which means that tariff-driven spikes in input costs could increase the likelihood of inventory write-downs if sales prices cannot keep pace. These dynamics require close monitoring to ensure that cost assumptions remain current and that financial results accurately reflect changing economics. Companies that have never been forced to record LCNRV reserves may now need to do so.
The effects of tariffs extend beyond inventory. Higher costs and reduced profitability may influence impairment testing for long-lived assets or goodwill, particularly if forecasts are revised downward. Companies that rely heavily on global suppliers may also need to revisit hedge accounting or other financial instruments if tariff changes alter expected cash flows. GAAP requires transparent disclosure of risks and uncertainties that could materially affect operations, and tariff exposure is increasingly relevant in this context. Auditors will expect to see clear, well-supported disclosures in the financial statements and management discussion, especially when tariffs materially influence pricing strategies, margins, or supply chain decisions.
From a controls perspective, tariff-related changes may necessitate adjustments in procurement, vendor management, and budgeting processes. Accounting teams should ensure internal controls capture tariff costs accurately and that changes in supplier sourcing or terms are properly approved and documented. External auditors are likely to focus on management’s processes for monitoring tariff impacts, the completeness of cost recognition, and the integrity of forecasting models. Demonstrating robust controls and well-documented assumptions will not only support audit readiness but also strengthen decision-making within the organization.
The future of tariffs and their impact remains uncertain for U.S. manufacturing. Policy changes at the federal level or court decisions could lead to reduced or eliminated tariffs. However, geopolitical tensions and trade negotiations continue to influence tariff policies, making it essential for manufacturers to stay agile and continually informed. Manufacturers will need to leverage innovative strategies to stay cost-efficient and competitive. Emphasizing local sourcing, investing in technology, and advocating for favorable trade policies will be critical to sustaining local manufacturers.