Jonathan Hughes, national managing principal and global practice leader of BDO USA’s Management Consulting practice, explains how manufacturers are reevaluating their North American supply networks in response to the Trump administration’s trade policy.

Manufacturers are reevaluating their sourcing strategies “with incredible interest and intensity,” Hughes says. Virtually every company in that sector is taking a hard look at where it makes product, and how it stands to be affected by the new round of tariffs. Then, armed with those assessments, they’re estimating the impact on supply chain cost, viability, reliability and availability under multiple scenarios.

At the same time, manufacturers are aware of the need for caution in taking extreme action, such as relocating plants and switching suppliers. Such actions entail long lead times and extensive planning. The challenge becomes how to avoid reacting too quickly or too slowly to current events.

According to BDO’s 2025 Manufacturing CFO Outlook Report, just after the presidential election, 63% of manufacturers were expecting their profitability to increase in 2025. How are they feeling about that now? Uncertain, Hughes says. Many remain optimistic about their profit margins in the near term, especially if they’re able to pass on higher import costs to consumers. Longer term, however, there’s concern about squeezing suppliers and the impact of suppressed investment.

Scenario modeling is a well-established exercise, with businesses matching educated guesses about the future with appropriate action. But modern-day technology can greatly aid in that effort — especially artificial intelligence, which can input and analyze far more data than humans are able to handle. Predictive analytics can help calculate costs, benefits and the overall implications of certain actions. But given the unprecedented nature of Trump’s trade policy, manufacturers also need to make educated guesses that aren’t based on historical patterns, Hughes says.