Just for a moment, let’s commiserate together: Tariffs are extremely volatile, difficult to predict, and are wreaking havoc on global supply chains. The changing landscape is impacting corporations, small- and medium-sized businesses, and consumers all around the world.
Dynamic supply chains aren’t new for the electronics and high-tech industry; they have been a cost of doing business for decades. What has changed is the increased uncertainty around cost and availability, which adds a fresh layer of complexity.
While the US Trade Commission has halted tariff implementations for 90 days for most countries, the levies placed on imports from China went into effect at 145% in April 2025, and in response, China imposed their own tariffs on US imports at a rate of 125%.
In the face of rapidly deteriorating trade relationships, businesses across most sectors face a set of tough and costly decisions, such as revamping supply chains, nearshoring manufacturing, and hiking prices for consumers.
Some investment analysts are calling it “demand destruction,” as high prices and limited availability erode consumer demand for affected products over the near and medium term. US manufacturers are already reporting a chilling effect on sales and global relationships due to uncertainty around tariffs moving forward.
Taking action to build supply chain resiliency
For electronics and high-tech companies, tariffs will significantly impact the upstream and downstream supply chains. These complex supply chains often involve hundreds or even thousands of suppliers around the globe. Those who work with contract manufacturers are seeing their partners also subject to increased tariffs.
Semiconductors are at the center of the conversation because so many products—from servers to smartphones to cars—incorporate them. Demand for this specialized hardware—especially with increased AI innovations—is growing rapidly. The global semiconductor industry ended 2024 with more than $630 billion in sales—a 19.1% increase over the previous year. Double-digit growth is again expected in 2025—or at least it was prior to the current trade climate.
South Korea, Taiwan, and China account for about 70% of total semiconductor manufacturing capacity. The US leads in global semiconductor revenue share (about 50%) but currently lags far behind in production capacity. While efforts are underway to increase the US production capacity for advanced logic semiconductors, that won’t happen overnight. Factories must be built, and technicians must be trained. These kinds of business transformations are measured in years. Other countries, like Germany, are actively trying to increase semiconductor production.
The only certainty is uncertainty: There will be continued uncertainty in the global supply chain. Despite the lack of control over tariffs and volatile geopolitics, that doesn’t mean that businesses are powerless to insulate themselves. But to blunt some of the impact of tariffs, they must strategize how they can respond now in the short term and build resilience for the future.
While the tariff situation is new and unpredictable, business leaders can begin by thinking about the fundamentals, starting with their supply chain. In this high growth, innovation-driven space, sourcing and supply chain decisions have always played an outsized role in whether new products meet the time, budget, volume, and quality targets. Now these decisions take on even more weight.
As you navigate the next few years, focus on what you can control—enabling your teams to be as efficient, informed, and agile as possible in this dynamic environment.
Strategy #1: Design anywhere, build anywhere
If you’ve made it this far, you deserve some good news: Engineering and intellectual property are not (currently) subject to tariffs so product design (for physical products, software, or both) can happen anywhere.
With this strategy, strong digital collaboration tools and product development systems become even more important because they enable companies to create region-specific, local supply chains.
Designing based on locally available components creates flexibility in choosing the most cost-effective and timely manufacturing option for a specific location. For example, many companies use different contract manufacturers to make the same components—the components look and work the same but have different part numbers because they were produced in different manufacturing locations.
Businesses are already reexamining how they use CAD and PLM, to better support rapid product redesign and lessen the impact of tariffs with greater local production.
Strategy #2: Broaden lists of approved suppliers
Suppliers are the lifeblood of electronics and high-tech companies and their supply chains are often connected. For example, semiconductor and chip manufacturers are an essential part of the supply chain of many high-tech products. Without semiconductors and chips, your smartphone is little more than a paperweight.
Diversifying your supply chain has been a trend for several years (especially post-COVID), and with fluctuating tariffs, once reliable suppliers or contractors may become cost prohibitive.
A 2023 Accenture research report found that product manufacturing across multiple plants will rise from 41% to 78% by 2026. This increase aligns with the increasing preference for producing goods within the same selling region, which the research found may reach 85% next year, up from 43%.
That’s one reason market leaders have up-leveled how they use their PLM investment—it enables them to rapidly identify and evaluate alternative suppliers less affected by tariffs through Approved Manufacturing Lists (AML) and Approved Vendor Lists (AVL). By seeking out different manufacturing routes, businesses will be more likely to keep costs down and retain customers.
Strategy #3: Conduct upfront cost analysis
With tariffs in flux, the costs of the materials and components that go into a product need examination earlier in the development process.
Leveraging software applications that integrate product development data with cost data from ERP and other business systems gives you a more complete picture of manufacturing costs. With that information, engineering teams can consider alternative designs and components well before manufacturing.
This can also mitigate the costs associated with late-stage design changes in the NPI process. Needing to redesign a new component due to supply chain availability can be expensive and cause delays—two very undesirable outcomes.
This strategy depends on actively pursuing a digital thread, which weaves a flow of interconnected product data throughout its lifecycle. With a more comprehensive view of a product’s journey, you gain greater visibility and flexibility to make the best decisions with up-to-date product-related data.
Strategy #4: Enhance traceability and compliance
The next few years will involve dynamically evolving products and supply chains. This makes change management a critical capability, as well as robust traceability and pre-configured industry templates to ensure manufacturers meet compliance requirements.
Highly regulated industries, like automotive and medical devices (both of which frequently have electronic and high-tech components), have their own changing landscape as well.
To manage these dynamic environments, many businesses are relying on ALM and PLM solutions to manage software and hardware requirements and improve governance across the product lifecycle. Mature governance practices make it easier to demonstrate that teams have established processes in place and product development assets are secure.
Navigate uncertainty with PTC
Investing in relocations, automation, and digitization is a serious conversation—and these conversations are happening in almost every company around the world, regardless of size or industry. These changes require capital, cross-functional collaboration, and business transformation. Some companies are electing to attempt to ride out the storm, hoping for different administrations and leaders to course correct.
As you are having your own conversations, it’s imperative to have a clear-eyed view of risk, including the risk of doing nothing. Delaying the discussion and action could imperil your ability to stay competitive.
At PTC, we closely partner with our customers to help them navigate uncertain times. We embrace an open ecosystem where our solutions can integrate with your existing tool stack and reduce time to value with out-of-the-box features. Like our customers, we think first about the business outcomes our digital solutions can enable—like supply chain resiliency.
Tariffs may be top of mind in 2025, but there will always be disruption of one kind or another. Investing in solutions that help your teams innovate, accelerate time to market, and make informed decisions is a forward-thinking choice.
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