President Trump’s Tariffs: How They’re Shaking Up Electronics Manufacturing and What You Can Do

In early 2025, the Trump administration introduced sweeping tariffs on imports from Canada, Mexico, and China. These include a 25% tariff on most goods coming from Canada and Mexico (with a lower 10% rate for Canadian energy) and an additional 10% on products from China—on top of existing duties. Although aimed at “rebalancing” trade and addressing issues like illegal drugs and immigration, the tariffs effectively overshadow existing free-trade agreements like the USMCA (United States-Mexico-Canada Agreement), which had eliminated most duties in North America​ since 2020.

Below is a concise look at how these tariffs impact the global electronics supply chain—especially Electronics Manufacturing Services (EMS), Original Equipment Manufacturers (OEMs), and Printed Circuit Board (PCB) makers—and what proactive solutions can help navigate this fast-changing landscape.

The tariffs’ immediate impact on EMS and OEMs

EMS providers

Leading EMS companies like Flex Ltd. and Jabil Inc. rely heavily on Mexico and China for their U.S.-bound production. With Mexico-origin goods now facing a 25% tariff and Chinese goods shouldering an additional 10%, a huge portion of these firms’ product lines becomes more expensive to import into the U.S.

• Mexico’s critical role: over recent years, Mexico has evolved into a key manufacturing hub for automotive electronics, consumer devices, and medical equipment. EMS providers capitalised on its proximity to the U.S. market, lower labour costs compared to the U.S., and favourable logistics. However, the new tariffs effectively neutralise much of that nearshore advantage.

• Cost pass-through: in most cases, EMS providers will attempt to pass extra costs on to their OEM customers. Still, larger clients with strong bargaining power may push back, forcing EMS firms to shoulder part of the tariff’s burden themselves.

• Scramble to diversify: to maintain competitiveness, EMS companies are exploring production shifts to countries like Vietnam, Malaysia, or even back to the U.S. in limited capacities. But relocating complex electronics assembly requires time, new supplier qualifications, and potential capital expenditures on factory expansions or new builds.

OEMs

Major consumer and computing electronics OEMs (e.g., Apple, Dell, HP, Lenovo) are among the hardest hit by the 2025 tariffs—particularly since many product categories that were exempt in previous years (like laptops and smartphones) are now fully included.

• Near-shoring upset: during the U.S.-China trade war of 2018-19, many OEMs chose Mexico to reduce reliance on China. But with a 25% penalty on Mexican goods, that strategy has been turned on its head, and OEMs must rapidly reassess their footprints.

• Balancing pricing and demand: OEMs face the classic dilemma of whether to absorb extra costs or pass them on to consumers. Premium-branded products (e.g., flagship smartphones) can often tolerate slight price increases without a massive drop in sales, whereas commodity segments (like budget laptops) are far more sensitive to price hikes, so demand can quickly erode.

• Supply chain reconfiguration: with tariffs now cutting into margins, OEMs may fast-track diversification into Southeast Asia, India, or other regions. Yet large-scale moves require stable infrastructure, a skilled workforce, and a supportive local ecosystem; even Apple’s highly publicised expansions into India have encountered regulatory and logistical complexities that slow the pace of relocation.

The role of PCB and component makers

PCBs and electronic components are at the heart of nearly every modern device, and many global supply chains still run through China.

China’s PCB dominance

China produces more than half of all PCBs globally, offering everything from simple single-layer boards to complex high-layer count and flexible PCBs. New and increased U.S. tariffs (an extra 10%, on top of existing duties) effectively raise the price of these boards—enough to tilt sourcing decisions.

Sourcing alternatives

Other major PCB hubs (Taiwan, South Korea, Japan) could see a short-term boost. However, many Taiwanese PCB powerhouses also operate factories in mainland China, prompting them to expand in Vietnam, Thailand, and Malaysia. For niche or high-spec boards, shifting completely out of China may not be immediately feasible due to equipment requirements, technical expertise, and scale.

Component bottlenecks

Connectors, cables, sub-assemblies, and power supplies from Mexico or China likewise become more expensive under these tariffs. Firms can seek alternate suppliers, but ramping up new sources takes time and may incur higher base prices.

Domestic and near-shore production

With Mexico and China both affected by hefty tariffs, some U.S. manufacturers and policymakers see an opening to re-shore PCB production for strategic or security-critical applications. However, rebuilding a robust, cost-competitive industry in the U.S. (or even in Canada) demands time, capital, and a skilled workforce.

Quality and certification hurdles

Switching PCB or component suppliers isn’t just about money; it also involves quality, testing, and certification to meet IPC standards, ISO requirements, or automotive-grade specs. Every relocation or new supplier contract must navigate these hurdles, often dragging out timelines.

The European perspective: collateral impact

While the bulk of new tariffs directly targets imports to the United States, the effects ripple into the European electronics sector as well.

Indirect cost increases 

Many European EMS providers (e.g., Zollner Elektronik AG, BMK Group) and OEMs rely on components or sub-assemblies from China and Mexico. If these are destined for U.S. customers, they now incur higher tariffs, potentially reducing demand for European-made end products.

Supply chain reshuffling 

Some European companies rely on Mexico as a staging ground for products shipping into the U.S. With a 25% tariff on Mexican exports to the U.S., near shoring benefits disappear, encouraging a re-evaluation of manufacturing footprints—including possible expansion in Eastern Europe or Southeast Asia for U.S.-bound production.

Higher competition in component sourcing 

Because U.S. buyers are seeking non-Chinese or non-Mexican suppliers, global competition for Southeast Asian parts could intensify. This can inflate component prices even in Europe, as everyone vies for the same alternative sources.

Opportunities for European suppliers 

On the flip side, European component and PCB manufacturers might see increased orders from U.S. or Asian firms looking to circumvent new tariffs. Nonetheless, these opportunities may be offset by Europe’s comparatively higher labour costs and less capacity to scale rapidly.

Tariff pass-through in global markets 

If U.S. OEMs raise prices to cover tariffs, global retail pricing can rise, dampening overall demand. This, in turn, impacts European electronics exports—particularly those integrated into American consumer or industrial supply chains.

Ultimately, although European producers aren’t targeted by the tariffs directly, they still grapple with the secondary effects of a reshuffled global supply chain. Finding the right balance of cost, location, and capacity is just as urgent in the EU as it is for North American and Asian players.

The longer-term reshuffle

Although the immediate pain is evident—rising costs, supply snarls, and quick pivots in production lines—the medium to long term could see profound changes.

Supply chain diversification

As businesses adopt a “China+N” strategy (maintaining some operations in China but branching into India, Vietnam, or elsewhere), partners with multi-country footprints gain a competitive edge. The ability to move production across several countries can mitigate risk when tariffs or policy changes hit one region.

Production regionalisation

COVID-19, earlier U.S.-China tensions, and now the 2025 tariffs all underscore the fragility of over-centralised manufacturing. Some firms see value in smaller, geographically distributed production hubs that hedge against sudden trade or logistics disruptions.

Capacity constraints and rising labour costs

Southeast Asian nations often have limited infrastructure, a smaller pool of skilled labour, and climbing wage rates as global demand rushes in. This can limit the speed and scale at which firms can relocate.

Technological leapfrog and automation

As they relocate or update factories, OEMs and EMS providers increasingly invest in robotics, machine learning, and other tech solutions. This automation reduces dependency on labour-cost arbitrage and creates more resilient, future-proof supply chains.

Ongoing policy uncertainty

Tariffs may remain in effect longer than initially expected. Even if they’re lifted under future administrations, manufacturers have learned that trade policies can shift abruptly—leading many to adopt a more flexible, globally scattered manufacturing model over single-country dependency.

Finding clarity in the chaos: how software helps

Relocation is just one lever to counteract tariffs. The real challenge is understanding how each potential move impacts total costs—factoring in labour, logistics, duties, and new supplier relationships. This complexity can overwhelm manual processes.

That’s where Luminovo’s Total Cost of Ownership (TCO) feature offers a critical edge:

• Scenario planning: Instantly compare the cost of building a product in Vietnam vs. Mexico vs. Eastern Europe, with all tariffs, freight, and local expenses included.

• Automated tariff calculations: Configure rules like “+10% if country of origin is China,” so your BOM automatically updates for each supply scenario.

• Comprehensive BOM analysis: Look beyond unit price to weigh shipping, duties, supply reliability, and more, ensuring that each component is sourced cost-effectively.

By integrating Luminovo’s TCO insights into your sourcing strategy, you can swiftly respond to trade shifts while maintaining profitability and high service levels.

Conclusion

President Trump’s 2025 tariffs have triggered significant upheaval across the electronics ecosystem, raising costs and creating logistical challenges for EMS providers, OEMs, and PCB makers around the globe—including in Europe. While the short-term disruptions are clear, the longer-term consequences range from deeper supply chain diversification to an upswing in automation and regionalized production.

Looking to protect your margins and maintain a competitive edge under uncertain trade conditions? Start by gaining full visibility into every cost driver in your BOM. Luminovo’s TCO module helps you manage and optimise complex sourcing decisions—so you’re never caught off-guard by tariffs or sudden policy shifts. Get in touch with our product experts to learn how you can transform these challenges into strategic opportunities for your electronics business.