August 2026 Volume 8

WASHINGTON UPDATE

FROM MATERIAL TO MACHINE The Washington Supply Chain By Omar S. Nashashibi

I n the past decade, my conversations with manufacturers about materials, machinery, and tooling have evolved. Price and availability are always considerations, but the primary discussion often centered on technical capabilities, tolerances, and metallurgical composition. Outside of an antidumping or countervailing duty case, the U.S. government was rarely a meaningful factor in manufacturing supply chains. Today, every sourcing decision must account for Washington and the actions of governments across the globe. Those earlier conversations evolved into a focus in the first Trump administration on whether he would impose tariffs. By 2019, manufacturers would ask about tariff exclusions and exemptions and if these tariffs were just a temporary negotiating tactic. In 2026, no one asks me if they are temporary and everyone recognizes that the current largest variable in their procurement is Washington. The U.S. is imposing tariffs on steel, aluminum, and copper under a Section 232 tariff action. Canada in July 2025 began a tariff rate quota regime along with up to a 50 percent rate on steel imports. Facing a barrage of imports from China, the European Union lowered its threshold for its own steel tariff rate quota system. Capitals worldwide are prioritizing critical minerals, and in some cases, placing export restrictions on essential inputs with few alternate sources. The Biden administration jumpstarted a global semiconductor and green technologies race for tooling by passing major legislation subsidizing U.S. industry, which led other governments to create or expand their own subsidies. The second Trump administration, in an effort to increase domestic demand, made permanent multiple tax incentives for purchasing equipment and conducting R&D activities. Government inaction can also factor into material and supply decision making. The tooling industry in the U.S. today is a fragment of what once existed in the 1980s. Heavy equipment is often assembled domestically; however, U.S.-owned and operated machine builders are increasingly difficult to find. The interventions by governments these past few years will likely increase as politicians race one another across a range of priorities related to national and economic security with machinery and tooling being front and center. This leads to the U.S. Department of Commerce investigation into industrial machinery and robotics, which may result in tariffs under the Section 232 national security law. The scope covers CNC machining centers, industrial stamping and pressing machines, automatic tool changers, jigs and fixtures, and machine tools for cutting, welding, and handling workpieces, along with application-specific specialty metalworking equipment used to treat, form, or cut metal, such as autoclaves and industrial ovens. We have met with the White House, the Commerce Department, and the office of the U.S. Trade Representative, and their commitment to increasing the domestic manufacturing of machine tools is quite evident. Washington is expecting companies to invest billions in heavy equipment facilities in the U.S.,

accompanied, of course, with the promise of tariffs to protect those investments. The timeline for President Trump to act on industrial machinery tariffs could materialize in the coming months as active talks with stakeholders continue in the nation’s capital. While the pending 232 investigation may bring additional tariffs on industrial machinery later this year, those purchasing tooling and select equipment from overseas already face tariffs under an existing 232 regime with a second pending. In April 2026 and again in June, the Commerce Department realigned the existing Section 232 steel, aluminum, and copper tariff program to create separate categories with a temporary reduced 15 percent rate for certain machines until January 1, 2028, when the rate increases to 25 percent. The change was both an acknowledgement and a message from the administration that even the slightest increase in cost of machinery that can range into the millions of dollars has a direct impact on their goal of growing domestic manufacturing. The most recent effort to replace the President’s global tariffs is the Section 301 Forced Labor investigation into sixty economies, including the EU, Japan, China, India, Canada, and Mexico. The Office of the USTR in June 2026 proposed a 10 percent or 12.5 percent tariff on imports from these countries and in a separate Section 232 action covering manufacturing excess capacity, specifically cited machine tools and machinery imports from countries such as Germany, Switzerland, and Japan. The Trump administration is taking a whole-of-government approach to materials, machinery and tooling. Although the January 2026 industry survey showed that 50 percent of forging respondents said that tariffs on raw materials had increased their costs, it is often these same tariffs that cover forgings themselves. This should remind all that, support them or not, tariffs will remain a factor. With a 59 percent capacity utilization rate, the industry has room to grow, which is exactly what the Pentagon wants to hear. They too are holding meetings in Washington and around the country specifically focused on machinery and tooling capabilities. Defense officials are convening stakeholders to identify and catalogue U.S. suppliers capable of supporting the defense industrial base. On Capitol Hill, lawmakers are increasingly asking questions over the origins of equipment and tooling in manufacturing plants across their Congressional Districts. A focus that began with China is expanding to examine the reliance on allies for tooling, machinery, and some materials. This is not a singular one-off action or a fleeting interest of politicians. Voters do not cast their ballots based on tooling and heavy equipment. Candidates for office do not stump on the campaign trail speaking about machine tools. Yet the focus has reached the highest levels of the U.S. Government. The President’s focus on materials such as steel and aluminum is well known. However, he has now instructed his cabinet to expand their tariff efforts to the equipment making the forgings and other components that the Trump administration seeks to protect.

6 FIA MAGAZINE | AUGUST 2026