Maximizing Opportunities for Contract Manufacturers in a Trump Presidency

As we look toward a second term for President Donald J. Trump, manufacturers — especially contract manufacturers — are positioning themselves to take advantage of a unique economic landscape. The 2024 election has brought forth a renewed commitment to reshoring manufacturing, tax relief, deregulation, and energy independence, all of which present both challenges and significant opportunities for the manufacturing sector.

We’re also looking towards a shake-up in the way our government is run with the involvement of high-profile figures like Elon Musk and Robert F. Kennedy Jr. in the administration which is likely to have far-reaching implications for the U.S. manufacturing landscape. Musk, with his leadership at Tesla and SpaceX, is positioned to influence industries critical to innovation, including transportation, space exploration, and AI-driven technologies. Meanwhile, Robert Kennedy’s focus on healthy living would potentially reduce the demand for pharmaceutical and medical manufacturing over the long term.

For contract manufacturers, this shift in leadership and investment priorities presents significant opportunities. With the U.S. aiming to boost its semiconductor production, especially in the wake of global supply chain disruptions, manufacturers that specialize in precision machining, electronics assembly, and advanced manufacturing techniques will be in high demand. The growing AI industry, which relies heavily on high-performance chips and computing hardware, will need skilled contract manufacturers to support the production of semiconductors and other critical components.

In addition to tech-driven industries, Trump’s commitment to revitalizing U.S. automotive manufacturing will have wide-reaching implications. Industries ranging from automotive to aerospace, construction, and renewable energy will require diverse manufacturing services—everything from machining and welding to precision assembly and supply chain management.

For contract manufacturers, it will be essential to market these capabilities, adapt to emerging technological trends, and position themselves as vital players in the reshaped manufacturing ecosystem. As industries pivot toward advanced technologies and sustainable production, staying ahead of these shifts will be crucial for success.

Most importantly though, contract manufacturers need to project and advertise their capabilities as they relate to growth industries. weCreate helps manufacturers of all sizes and shapes build a web presence that attracts new customers and demonstrates their credibility.

Steps for Success

1. Embrace the Reshoring Movement

One of the most significant drivers of policy under a second Trump term is reshoring—bringing manufacturing jobs and production back to the U.S. After years of seeing manufacturing offshored to countries like China, the Trump administration has placed a strong emphasis on strengthening domestic manufacturing and reducing dependency on foreign suppliers.

For contract manufacturers, this presents a tremendous opportunity. Companies that specialize in machining, assembly, and production services are in high demand as manufacturers look to reduce lead times, lower logistics costs, and regain control over their supply chains.

What Contract Manufacturers Should Do:

• Invest in Automation and Efficiency: As U.S. manufacturers bring production back home, they will be looking for partners that can offer high-quality work at competitive prices. Investing in automation technologies can help reduce production costs and increase output, making contract manufacturers more attractive to potential clients.
• Expand Capacity for U.S. Supply Chains: With reshoring efforts gaining momentum, manufacturers will need to secure reliable, high-quality domestic suppliers. Contract manufacturers should expand their production capabilities, offering specialized services that allow them to capture market share from businesses that were previously dependent on foreign manufacturers.
• Foster Relationships with Large OEMs: As reshoring becomes a priority, Original Equipment Manufacturers (OEMs) will be looking for contract manufacturers to handle more complex tasks, such as machining and assembly, within the U.S. Strong relationships with OEMs and a proven track record of reliability will be key to securing long-term contracts.

2. Navigate the Evolving Trade Landscape

Under President Trump’s leadership, the U.S. has moved towards a more protectionist stance, with policies that aim to reduce trade imbalances and curtail the negative impacts of unfair trade practices, especially with China. The continuation of tariffs and trade policies designed to incentivize U.S. production will create both challenges and opportunities for manufacturers.

For contract manufacturers, understanding the nuances of these trade policies is critical. While tariffs on imported goods can lead to higher input costs, they also provide a competitive edge for U.S.-based manufacturers who can offer local alternatives.

What Contract Manufacturers Should Do:

• Adapt to Tariffs and Import Restrictions: Contract manufacturers should closely monitor changes in tariffs and import restrictions, particularly on raw materials and components imported from countries like China. By building relationships with U.S.-based suppliers or seeking alternative sources in friendly trade partners (e.g., Mexico, Canada), manufacturers can minimize the impact of tariffs on production costs.
• Position for Trade Policy Shifts: As trade agreements like the USMCA (United States-Mexico-Canada Agreement) continue to evolve, there may be new opportunities to increase exports to neighboring countries. Contract manufacturers that are able to adapt quickly to these changes can expand their market reach, particularly in the North American market.

Action Steps:

• Stay Informed on Trade Policy Updates: Regularly monitor government publications, trade organization announcements, and industry news related to trade agreements. Subscribe to updates from agencies like the U.S. Trade Representative (USTR) and U.S. Customs and Border Protection (CBP). These sources often provide information about shifts in tariff classifications, rules of origin, or customs procedures that could affect export and import strategies.
• Engage with Industry Associations: Organizations like the National Association of Manufacturers (NAM), the Coalition for a Prosperous America (CPA), and regional trade groups can be invaluable sources of information about changes to trade policies. These groups often provide access to webinars, seminars, and policy briefings that focus on specific trade agreements.
• Strengthen Supplier Networks: Look for suppliers in Canada and Mexico to enhance the resilience of your supply chain. For example, find low-cost materials or specialized components that are tariff-free within the USMCA zone and align with the rules of origin. By having multiple reliable suppliers in North America, you can offer a faster turnaround time to customers while keeping costs low.
• Position for Market Demand in Canada and Mexico: Assess the growing demand for U.S.-made goods within Canada and Mexico, particularly in sectors like automotive, aerospace, and machinery. Research market reports and forecasted trends to identify high-demand areas where your services could fit. Establish relationships with key OEMs in North America to position your business as a preferred supplier for cross-border supply chains.
• Leverage Export Incentives and Free Trade Zones: Consider taking advantage of Foreign-Trade Zones (FTZs) within the U.S. and Free Trade Areas in Canada and Mexico. These zones offer benefits like reduced or deferred customs duties, easier regulatory compliance, and quicker processing times. By positioning your manufacturing facility near an FTZ, you can streamline the import/export process while reducing costs for your customers.

3. Leverage Tax Incentives and Regulatory Relief

The Tax Cuts and Jobs Act of 2017 played a pivotal role in revitalizing the manufacturing sector by lowering corporate tax rates and incentivizing capital investment. Under a second Trump administration, we can expect further regulatory relief, especially in areas like environmental regulation and labor laws, which could reduce overhead for manufacturers. For contract manufacturers, favorable tax policies and regulatory reforms offer the chance to reinvest in operations, upgrade technology, and attract new clients.

What Contract Manufacturers Should Do:

• Take Advantage of Tax Relief: Contract manufacturers should fully understand and leverage tax incentives available under the new administration. This includes credits for capital investment, such as machinery upgrades, R&D, and energy-efficient technologies. By reinvesting in their businesses, contract manufacturers can increase efficiency and expand their production capabilities.
• Advocate for Regulatory Changes: As regulatory burdens are reduced, contract manufacturers can benefit from simplified processes, particularly in environmental and workplace safety regulations. It’s essential for manufacturers to stay engaged with industry associations to advocate for pro-business policies that further reduce unnecessary regulation.
• Focus on Compliance and Innovation: While deregulation may ease some burdens, contract manufacturers must still stay vigilant about compliance, especially in industries like aerospace and medical device manufacturing. Additionally, leveraging innovations in AI, robotics, and IoT (Internet of Things) can drive competitiveness in a deregulated environment.

4. Capitalize on Energy Reform and Infrastructure Investment

A second Trump term is likely to focus heavily on energy independence and infrastructure investment. The administration’s commitment to expanding domestic energy production—especially through an “all-of-the-above” strategy involving oil, natural gas, and renewables—will have wide-reaching implications for the manufacturing sector. Additionally, the ongoing push for improved infrastructure, including roads, bridges, and ports, will create demand for raw materials and construction-related manufacturing services.

What Contract Manufacturers Should Do:

• Position for Energy and Infrastructure Demand: Contract manufacturers involved in sectors like metalworking, construction, and heavy machinery can expect increased demand as infrastructure projects ramp up. Staying well-informed about large-scale federal projects and leveraging relationships with government contractors can provide lucrative opportunities.
• Explore Green Manufacturing Options: As energy reform moves forward, there will be a growing emphasis on sustainable manufacturing practices. Contract manufacturers that incorporate green technologies or produce environmentally friendly products will be better positioned to capitalize on government incentives and client demand for sustainable practices.

5. Focus on Skilled Workforce Development

A common theme in the Trump administration’s manufacturing policy has been the emphasis on skilled labor and workforce development. As manufacturers continue to reshore production, there will be an increasing need for a highly skilled workforce in fields like welding, machining, and CNC operations.

Contract manufacturers that invest in workforce development will not only help fulfill industry demand but also secure long-term success in a competitive market.

What Contract Manufacturers Should Do:

• Partner with Educational Institutions: Contract manufacturers should work closely with technical schools, community colleges, and vocational programs to develop a pipeline of skilled workers. This could include providing internships, apprenticeships, or co-op programs to attract the next generation of talent.
• Invest in Training and Retention: As manufacturing technology evolves, it is crucial to provide ongoing training for employees to ensure they are equipped with the latest skills. Retaining skilled workers through competitive wages, benefits, and career growth opportunities will help maintain a stable workforce.

Conclusion: Strategic Adaptation for Success

A second Trump presidency offers numerous opportunities and challenges for contract manufacturers. By aligning operations with the administration’s key priorities—reshoring, tax incentives, trade policies, and energy reform—contract manufacturers can position themselves for significant growth. At the same time, the sector must remain agile, ready to adapt to evolving policies and global market conditions.

By staying ahead of industry trends and embracing new technologies, contract manufacturers can thrive in the changing landscape of U.S. manufacturing under President Trump’s leadership. By positioning themselves at the top of search engines and displaying their credibility through a fantastic website, manufacturers can expect to maximize their growth over the next four years (at least).