April 3, 2025 Rising Tariffs Necessitate Leaning into Offshoring

Manufacturers can use offshoring as a strategy to offset rising tariffs, reduce supply chain risks, drive innovation, and boost profit margins.

By Christina Snyder

It’s been estimated that the impact of new tariffs may cost U.S. manufacturers an additional $144 billion in costs annually. While we have yet to see any final determinations and impacts of these tariffs, manufacturers are bracing for the worst, including the possibility of retaliatory tariffs and rising inflation.

As global trade policies shift and tariffs on imported goods rise, manufacturing companies must rethink their operational strategies to maintain cost efficiency and competitiveness. One emerging solution is strategic talent offshoring, which can mitigate financial pressures while strengthening supply chain resilience.

Offshoring Talent Offsets Rising Tariff Costs

Tariffs directly increase the cost of raw materials, components, and finished goods, putting pressure on manufacturers to absorb costs or pass them on to consumers.

Rather than react defensively to tariffs, companies can use offshoring as an offensive strategy to scale operations efficiently.

Higher costs due to tariffs often prompt businesses to reassess their cost structures, and a key area to zero in on is the workforce. Labor costs can account for as much as 70% of total business costs according to the U.S. Bureau of Labor Statistics.

Leveraging global talent pools — particularly in engineering, design, and software development — helps businesses lower operational expenses without sacrificing product quality.

By reallocating budgets from high-cost domestic roles to lower-cost yet highly skilled international teams, companies can reallocate resources toward tariff-impacted areas such as material procurement or logistics.

Diversifying Talent Reduces Supply Chain Risks

Geopolitical instability and trade barriers have made supply chains more vulnerable than ever. Many organizations are looking at how they can diversify their supply chains and even their trading partners.

A diversified, globally distributed workforce allows companies to maintain operational flexibility and ensure continuity, even if tariff policies shift unexpectedly.

Offshoring specialized roles (i.e., procurement management, logistics planning) to talent hubs closer to key manufacturing or distribution centers can aid in agility by helping companies react quickly to supply chain disruptions, and even support.

Local language support in a supply chain is crucial for effective communication and collaboration with suppliers, customers, and other key stakeholders so offshored talent can be a way to acquire personnel that are native speakers in a given region.

Going Big on Tech Innovation Without Compromising Cost Efficiency

Many manufacturing companies increasingly rely on R&D and digital transformation to stay competitive.

Offshoring high-tech talent such as software developers, automation engineers, and AI specialists can accelerate the pace of innovation while holding the line on cost structures.

The U.S. manufacturing sector can ill-afford to fall behind in global innovation. Instead of cutting investment in product development due to tariff-related cost pressures, companies can maintain momentum by tapping into offshore tech, engineering and design expertise.

Offshoring can enable manufacturers to invest more in research and development (R&D), helping them stay competitive in the fast-changing global marketplace.

Enhancing Profit Margins Without Reducing the Workforce

Cost-cutting strategies often lead to workforce reductions, which can harm morale and overall long-term competitiveness. The manufacturing sector relies on skilled workers with deep knowledge of specific processes and machinery, which can be lost when companies have to lay off employees, leading to production delays and even quality issues. In an industry that is perennially challenged to find skilled labor, once laid off, it might not be easy to find the resources to hire back when needed. 

Strategic offshoring is a better approach that allows companies to reduce labor costs while maintaining or even expanding their overall workforce. Hybrid work models that integrate offshore talent with domestic teams enable companies to optimize efficiency without layoffs.

Offshoring in Use by Manufacturing and Consumer Goods Powerhouses

The same advancements in collaboration tools and cloud computing that have made remote work seamless are also playing a role in successful offshoring.

There are many examples of manufacturers leveraging offshoring for competitive advantage. 

Multinational conglomerate General Electric has established research and development centers overseas, taking advantage of top-flight expertise with labor cost advantages, and cites increased speed of innovation and faster time-to-market as key benefits.  

Consumer goods powerhouse Proctor & Gamble has embraced offshored outsourcing services to streamline its back-office operations and supply chain management. Functions such as finance and accounting are now undertaken by highly skilled professionals in countries such as India and China.

Offshoring: A Strategic Lever for Growth

Rather than reacting defensively to tariffs, manufacturers can use offshoring as an offensive strategy to scale operations efficiently.

Leveraging offshore talent in lower-cost regions allows businesses to reinvest savings into market expansion, sustainability initiatives, or advanced manufacturing technologies.

Companies that proactively take steps to leverage the global talent markets will be better positioned to outcompete firms that only focus on cost-cutting in response to tariffs.

While offshoring cannot eliminate the impact of rising tariffs, it offers a strategic lever for manufacturers to remain competitive. By integrating offshore talent into their business models, companies can protect margins, drive innovation, and maintain operational flexibility in an increasingly uncertain global trade landscape.

About the Author
Christina Snyder is the US President and Global Chief Revenue Officer of Emapta, one of the fastest-growing providers of global workforce solutions. With over 20 years of executive leadership and sales experience, Christina has a proven track record of driving growth and designing innovative business models that redefine how organizations operate.

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