Navigating Tariff Uncertainty: Lessons in Adaptability and Manufacturing Strategy

In a recent interactive session, Heatherly Bucher, Director of Strategic Alliances at Arena by PTC, sat down with Anna-Katrina Shedletsky, CEO and Co-Founder of Instrumental, to unpack the evolving landscape of tariffs, manufacturing strategy, and supply chain resilience. Their conversation offers a timely and insightful look into how companies are navigating uncertainty and what it means for the future of product development and manufacturing.

The Response to Wavering U.S.-China Tariffs

Heatherly and Anna-Katrina kicked off their discussion with a look at how shifting U.S.-China tariffs are creating unpredictability, forcing companies to respond differently depending on their level of exposure to China, operational experience elsewhere, and primary market locations.

Anna-Katrina emphasized, “There’s no one answer that fits all for this.” In general, companies are taking one of these strategic approaches:

• Stay the course: Many companies have committed to a plan and are sticking to it, viewing the temporary 90-day pause as just more uncertainty rather than a reason to change course.
• Phased exit: Some are completing their new product introduction (NPI) in China and planning to shift production afterward while keeping the option open to remain if needed.
• Immediate relocation: Others are rapidly moving operations out of China, with new factories already ramping up.

Additionally, companies are exploring alternative manufacturing locations, particularly in Greater Asia and Mexico, where favorable tariff treatments under agreements like the United States-Mexico-Canada Agreement (USMCA) can be leveraged through tariff engineering and strategic use of harmonized tariff schedule (HTS) codes.

The Cost of Uncertainty: Why Manufacturers Are Rethinking Their Global Footprint

Uncertainty is expensive. For some businesses, the cost of inaction—such as continuing to manufacture in China under high tariffs—can reach up to $200,000 per day. This financial pressure is prompting manufacturers to accelerate factory relocations, often under tight timelines and with significant operational risk.

Moving a factory is not just a logistical challenge—it’s a strategic one. Companies must weigh the cost of maintaining dual production lines, the risk of inventory shortages, and the complexity of transferring tribal knowledge and undocumented processes.

Navigating NPI Risks During Factory Relocation

New product introduction (NPI) is already a high-stakes process. Add in a factory move, and the risk multiplies. Anna-Katrina likened the process to running an NPI all over again, even for mature products. She stressed the importance of best practices, such as not shutting down the original site until the new one is fully operational, and the value of solutions like Arena PLM and Instrumental in capturing and transferring critical production data.

Strategic Focus: What Leaders Should Prioritize

As companies head into their busy manufacturing season, the focus must shift from reactive to strategic. Anna-Katrina urged leaders to:

• Know your numbers: Understand the daily cost of tariffs and delays.
• Invest in acceleration: Tools, consultants, and technologies that reduce bring-up time can offer rapid ROI.
• Clarify the mission: Whether it’s minimizing cost or ensuring a flawless product launch, teams need clear priorities.
• Leverage existing tools: Many companies underutilize systems like Arena and Instrumental. Now is the time to fully deploy features including Arena’s quality management, supplier access, and training modules as well as Instrumental’s AI-driven defect detection platform.

Design for Adaptability: The Long-Term Lesson

Looking ahead, the key takeaway from this period may be the importance of designing for adaptability. This includes:

• Avoiding house parts that limit bill of materials (BOM) flexibility
• Considering tariff engineering early in the design process
• Retaining in-house knowledge and manufacturing know-how
• Building resilient teams and supply chains that can pivot quickly

Anna-Katrina also highlighted a cultural shift: the resurgence of in-house manufacturing and the reevaluation of the original design manufacturer (ODM) model. In a volatile world, companies that own their design and production processes may be better positioned to adapt. By embracing cloud-native product lifecycle management (PLM) solutions like Arena, companies can maintain control of their intellectual property and keep product development processes on track as they shift production.

A Bright Spot: Innovation From Startups

Despite the challenges, there’s optimism. Startups are leading the way in reimagining NPI and production. These agile teams are leveraging cloud-native solutions, smart manufacturing technologies, and bold strategies to bring innovative products to market faster and more efficiently.

Embracing Change

The conversation between Arena and Instrumental underscores a critical truth: what worked yesterday may not work today. As companies face ongoing tariff uncertainty, the need for adaptability, strategic clarity, and operational excellence has never been greater.

Whether you’re a startup or a Fortune 50 company, the path forward lies in embracing change, investing in the right technology, and building resilient, knowledge-rich teams ready to tackle whatever comes next.

Watch the full interview here.