When I was a kid, the US imposed tariffs on Japanese cars. Why? Because high gas prices led consumers to want smaller, more efficient cars, and American automakers only produced gas-guzzlers. To make domestic cars more attractive and to buy time for the US makers to tool up for this new demand, the government imposed import limits and tariffs that made it harder to buy a Japanese car than an American-made one. These were a specific economic tool used with a clear objective (that led to unintended consequences, but that’s another story).

What’s different today is that the tariffs are so broad that they affect every industry. And today isn’t the 1970s. Today’s cars, even ones assembled in the US, use internationally sourced steel and other parts that will be 20%, 30%, 40%, 50% more expensive starting any moment now.

But it’s not just cars. In the short term, one estimate I saw said that the typical US household will have to spend an additional $4,000 because of the tariffs. That’s income that won’t be available for other things — and it’s a significant enough number to send some people into debt, harming their future purchasing power.

But let’s say this was a good idea. (IMHO, as a consumer but not an economist, it wasn’t. Please don’t @ me; I won’t be changing my mind on this.) What happens now? And what’s the PLMish impact?

1. The 1970s auto industry tariffs and import restrictions led to innovation in vehicle design to make small cars more “American”, and in manufacturing, to produce more quickly. I’m not sure how that could apply this time around, since the tariffs are so wide-reaching – but there could be some buy-local sentiment. TBD. I think the next is more likely:
2. Global trade will, of course, continue, making this an opportunity to rethink supply chains and figure out the combination of lowest produced price + lowest added tariff + highest quality + highest reliability + many other criteria for each sourced component. We could see more digitalization as manufacturers think through their supplier strategy and more what-if exercises, which also means more reliance on digital BOMs, simulation, CAD, ideation, and other toolsets. It’s all about risk assessment and management.
3. A shift to near-shoring/on-shoring component production might lead to more manufacturing plants being built. That’s a long game, but it could lead to more factory design and optimization tools, planning, digital training, etc.
4. If the US enters a recession (quite possible, according to economists, if prices rise as expected), buyers here will be choosy in where they spend. That makes it even more important to innovate in whatever industry to attract eyeballs and create demand. Again, CAD, simulation, etc.
5. All of this uncertainty favors software vendors who offer flexible licensing models. In bad times, subscriptions will follow workforce trends; if a manufacturer lays people off, their subs will be released. If they have software under maintenance, those payments may be easier to continue (since they’re typically lower) or more strategic, if the vendor allows catchup payments for dropped maintenance seats. In any case, being flexible and friendly builds goodwill, which is never a bad thing.

Of course, it’s entirely possible that some of these tariffs may simply vanish if countries do whatever the administration is asking of them.

This game of chicken has real consequences. Companies need to plan with the best information available to them, and today that means tariffs. It’s unlikely that anyone will forget this moment of economic shock-and-awe or consider the US a trustworthy trading partner for a very long time.

From a PLMish perspective, the first half of 2025 was always going to be slow to medium growth, and those forecasts were made after the tariff rumblings began. How slow remains to be seen; companies start reporting on Q1 in a few weeks and we should get updated forecasts as they see how their customers are looking at their options.