Can It Open Doors For Small U.S. Manufacturers?

Can American small manufacturers turn de minimis disruption into growth opportunities?

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The $800 de minimis exemption on imports was eliminated on May 2, 2025, for China and Hong Kong, and is scheduled to vanish for all remaining countries this Friday, August 29. Consumers and small businesses are bracing for impact. For companies that rely on global supply chains, tariff disruption has already created waves of anxiety. And now, reported pauses in international mail services—while sending countries build systems to track and collect duties on low-value packages—are adding new stresses for both consumers and small producers, as imported goods are expected to become 12% to 22% more expensive and take longer to arrive*.

The instinctive response to tariff uncertainty (or any type of uncertainty, really) is to hunker down, wait, and see what happens. But that’s not the only choice, and it’s not the best choice. For American producers—particularly small and mid-sized manufacturers—this is a moment of opportunity as much as it is a moment of risk.

Beyond De Minimis: The Problem With Uncertainty

Uncertainty is corrosive to decision-making. When managers don’t know what to expect, they delay investments, stall on hiring, and avoid new product development. That impulse is understandable, but it can also leave firms less competitive when the environment shifts suddenly, as this year’s carnival of tariffs has already demonstrated.

Tariffs are something the average business owner cannot control. What business leaders can control is how prepared their companies are to adapt when policy and/or economic shifts occur. The work of leadership is to focus energy on what can be controlled, so there’s capacity to handle what cannot.

What can be controlled?

• Inventory levels.
• Process efficiency and effectiveness.
• Margins.
• Product quality.
• Employee confidence and motivation.

These areas are not just defensive measures. They form the groundwork for growth when external conditions tilt the playing field, as tariff changes are now doing.

Lay the Track Before the Train

The metaphor I often return to is “laying the track before the train.” Growth requires foundations strong enough to carry the weight. Without such foundations, growth exposes weaknesses that can derail the entire business.

For producers, the foundation starts with technology. Most small and mid-sized manufacturers still run on spreadsheets and a patchwork of unintegrated software. That approach might suffice at low volume, but it cannot sustain scale. When volumes increase—precisely the moment producers will want to seize as imports get more expensive—the inefficiencies in those systems drive costs up and margins down.

Fortunately, the tools available to smaller producers have changed. After two decades of waiting, we finally have enterprise-quality systems that are both affordable and accessible for smaller firms. Robust enterprise resource planning (ERP) and manufacturing resource planning (MRP) solutions once out of reach are now available at reasonable costs, and with usability, that make sense for companies with fewer than 100 employees. These systems allow firms to manage inventory, costs, and processes with the same rigor that larger competitors have long enjoyed. That kind of control is no longer optional. It is essential in an environment where tariffs, shipping delays, and fluctuating demand can eat margins overnight.

Process Before Growth

The second foundation is process. Too many small manufacturers operate with informal workflows and tacit knowledge. At low volumes, inefficiencies may hide in the cracks. But when volumes rise, those cracks widen into profit-draining gaps.

Refining processes before pursuing growth is critical. Lean practices—nothing exotic, just the basics of waste elimination, workflow clarity, and continuous improvement—can have a measurable impact on both cost and quality. Better processes mean faster throughput, fewer errors, and more reliable fulfillment. They also mean that when growth opportunities present themselves, companies can pursue them without collapsing under the weight of their own inefficiencies.

Does the Elimination of the De Minimis Exemption Level the Playing Field? A Bit of Labor Cost Realism

It’s worth noting that higher U.S. wages are a real disadvantage, particularly in labor-intensive sectors like apparel or basic goods assembly. But that’s not the whole story. Researchers and industry analysts emphasize that per-unit cost differences narrow when productivity, automation, local supply chain clustering, and quality advantages are factored in. In more complex or highly automated manufacturing (think semiconductors, aerospace, medical devices, precision machining) the labor share of total cost is relatively small. In those categories, a 12% to 22% increase in import costs due to tariffs could meaningfully shift the competitive equation, making U.S. production far more viable than many assume.

For producers, the practical takeaway is to look critically at where labor really drives cost in their own operations, and where investments in automation or process efficiency could change the math.

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When U.S. Production Can Compete

Labor-intensive goods (e.g., apparel, simple assembly): Tariffs may narrow the gap, but generally don’t erase it. Unless automation replaces much of the labor, foreign producers will usually remain cheaper.

Complex or automated manufacturing (e.g., semiconductors, aerospace, medical devices): Labor is a small share of total cost. A 12%–22% import price increase, combined with U.S. productivity and quality advantages, can make domestic production more attractive.

Products with high shipping or time sensitivity (e.g., perishable goods, heavy/bulky items, customized or fast-fashion runs): Added logistics costs combined with tariffs can tip the scales toward U.S. production.

Goods requiring tight supply chain integration (e.g., components in regulated industries, just-in-time parts): The benefits of regional/local supply chain clustering, faster iteration, and lower risk can outweigh foreign labor cost savings.

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The Tech Stack Trap

There’s another challenge: technology bloat. Smaller firms often piece together marketing technology (martech), e-commerce platforms, and back-office software in ways that are more accidental than intentional. The result is a tottering stack of partially used systems, redundant subscriptions, and fragile integrations.

Adding AI into this environment, as many firms are now doing, risks compounding the problem. AI features are proliferating in nearly every software platform. But layering AI onto a fragmented stack only deepens inefficiencies.

The better path is to rationalize the tech environment. Identify the core system of record—inventory, financials, production—and ensure the right integrations exist to support it. Not every piece of software needs to talk to every other piece. What’s needed is intentional integration at critical points. Only then does it make sense to add AI tools, and only if they align with clear use cases.

There are very promising applications of AI for small manufacturers. The most promising aren’t chatbots, social media generators, or copywriting apps. Instead, small manufacturers should be evaluating the tools that automate repetitive back-end processes, assist with documentation, strengthen quality control, and accelerate design iteration. But these tools deliver value only when layered onto sound processes and strong data.

The Danger—and Necessity—of Growth

It’s worth acknowledging that growth is dangerous. It is expensive, resource-intensive, and prone to expose the weakest parts of an organization. That’s precisely why so many businesses falter at certain plateaus of scale. But danger does not mean avoidance. It means preparation.

The way to manage growth is the same as the way to manage uncertainty: anticipate problems, mitigate risks in advance, and build capacity to adapt to surprises. Growth will always reveal weaknesses, but foresight can turn those weaknesses into manageable bumps rather than fatal flaws.

The removal of the de minimis exemption, should it happen, is just one more wrinkle in a long line of unpredictable policy shifts. It won’t be the last. But for American producers, the larger story is this: when imports get more expensive, even incrementally, U.S.-made goods become more competitive. Yes, labor costs here are higher. But when tariff costs and shipping delays are added to the equation, domestic producers gain an edge—if they are ready to seize it.

The Model For Moving Forward

So how can U.S. producers use this moment? Here’s a framework:

1. Stabilize what you can control. Inventory, processes, margins, and employee confidence are not optional. They’re survival factors.
2. Invest in the right technology. Not technology for technology’s sake, but systems that create visibility into costs, control over workflows, and actionable data.
3. Refine processes before scaling. Lean practices and workflow improvements reduce the risk of margin collapse when volumes rise.
4. Rationalize your tech stack. Cut redundant systems, simplify integrations, and align AI to real operational needs, not hype.
5. Prepare for growth deliberately. Anticipate that growth will strain the organization. Plan for training, quality, and cash flow before the orders arrive.

Uncertainty in trade policy is not going away, and it’s impossible to predict the next policy shift. Tariffs will rise, fall, and rise again. But we can prepare our organizations to adapt when in real time. American producers who take this moment to strengthen foundations will find themselves positioned not only to weather uncertainty, but to capitalize on it.

The removal of de minimis is not just a threat. It’s a signal. Imports are vulnerable. That vulnerability is an opening for American producers. The question is: will we be ready to step into it?