Navigating Changing Tariffs in the Electronic Components Supply Chain

Recently, rapid changes to tariff policy have created new challenges for manufacturers navigating the electronic components supply chain.

In recent weeks, supply chain and procurement managers have had to assess the impact of both broad-sweeping and industry-targeted tariffs, a task made more difficult by ongoing changes to tariff rates, exemptions, and effective dates.

With so much change in such a short period of time, it is critical for technology manufacturers to understand where their parts come from and what alternative components can be substituted into their designs. Many are altering supply chain strategies for managing increased costs from the changing tariff rates around the globe.

How Tariffs Impact the Electronic Components Supply Chain

Given the volatility in tariffs over the past few weeks, it’s important to see what tariffs will actually be implemented rather than relying solely upon announcements that recent history has shown can change – sometimes daily, sometimes hourly.  Currently, the Trump administration has imposed a global 10% baseline tariff rate and substantially increased tariffs on Chinese goods. The administration has also proposed “reciprocal tariffs” that would affect many other key trade regions in the electronic components supply chain. These reciprocal tariffs are currently in a 90-day pause period to allow for negotiation with US trading partners, so manufacturers should anticipate that tariff rate may fluctuate further in the short term.

The new tariffs are increasing the pressure on manufacturers to find new ways to mitigate increasing costs in their supply chain. According to an IPC survey in March 28% of manufacturers reported that they had transitioned to non-tariffed suppliers. Those who have not yet transitioned are looking to understand their exposure and explore alternative sources or parts.

How Companies Can Mitigate the Impact of Tariffs

These universal and reciprocal tariffs may be just the beginning of a potentially long and escalating trade war. Understanding where parts come from is critical if manufacturers are to reduce the burden caused by the new tariffs. Companies on leading edge of progress are thoroughly examining their complete supply chains to identify all materials and components sourced from countries subject to tariffs.

Knowing the country of origin for each component in your bill of materials (BOM) is critical in mapping out your supply chain and understanding how much of your BOM is exposed to the new tariff rates. This is even more challenging for manufacturers who have assemblies that frequently cross borders, such as those in the automotive industry.  If finished parts are subject to tariffs each time they cross a border before they reach their final assembly destination, this has the potential to cause a cascading tariff effect that can rapidly increase costs in complex supply chains.

Manufacturers can mitigate these risks through evaluating alternative parts and cost drivers, tariffs included, that affect the total cost of a component.

Assess the Tariff Impacts on your Supply Chain with SiliconExpert

SiliconExpert’s database of electronic components includes information on countries of origin and classification codes used for tariff schedules.  We can help you determine the increased costs potential tariffs might have on your supply chain so you can make strategic decisions and plan for what’s coming.

With a combination of professional services and software, our team can quickly get you up to speed on the impacts on your supply chain and enable you to monitor any changes as the tariff landscape evolves. The one-time professional service helps you solve the problems of today by quickly getting the information you need. While our software allows you to anticipate tomorrow by continuously monitoring parts, especially high-risk components by country of origin, so you avoid adding them to your design. Helping your engineering, procurement, and supply chain team avoid redesigns.

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