Navigating New Tariffs: The Strategic Shift to Alternative Materials in Manufacturing

The current economic climate, marked by new tariffs introduced by the Trump administration in 2025, presents significant challenges for manufacturers, engineers, and consumers alike. With a 25% tariff on steel and aluminum imports, and a similar levy on automobiles and automotive parts, businesses are grappling with escalating costs, potential layoffs, and supply chain complexities. While the situation remains volatile and subject to change, manufacturers have a limited, yet critical, set of options for adaptation. Among the most actionable strategies for North American manufacturers is re-evaluating and transitioning to different materials for their products.
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The Strategic Advantage of Carbon Fiber as an Alternative

One primary solution involves considering alternative materials, particularly carbon fiber, as a substitute for aluminum and steel. This is especially pertinent unless a product specifically requires the unique properties of traditional metals, such as Coors Light cans or airplane wings. Carbon fiber-reinforced composites offer several compelling advantages:

• Strength and Lightweight: Carbon fiber composites, when reinforced with continuous carbon fiber, can achieve strength comparable to 6061-T6 aluminum. They are also 50% lighter than aluminum, boasting a high strength-to-weight ratio.
• Durability: These materials are heat, chemical, and impact-resistant, and, unlike steel or aluminum, do not suffer corrosion. They also exhibit robustness when it comes to temperature, with less shrinkage and expansion.
• Versatile Applications: Carbon fiber composites are suitable for creating one-off end-use parts, custom jigs, fixtures, and specialty tooling. Specific applications include stiff parts for items like telescopes, robotic arm grippers, aviation components such as drone attachments, model aircraft, and outdoor consumer goods like bicycle frames.
• Local Sourcing: As a major oil producer, the USA has an abundance of offshoot industries including several domestic carbon fiber and resin manufacturers. Peninsula Composites has close relationships with all of these and can negotiate the best solution for any given project through our domestic supplier network. 
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Navigating Tariffs on Carbon Fiber

The shift to carbon fiber, however, is not entirely immune to the current tariff landscape. Raw carbon fiber and epoxy resin systems have been subject to the Trump administration’s Section 301 tariffs, originally ranging from 10% to 25%. More recently, tariffs on raw carbon fiber tow from targeted countries increased to 25% (from 7.5%), and on prepreg materials to 17.5% (from 4.2%). A proposed Carbon Border Adjustment Mechanism (CBAM) could further add 8-12% to costs for materials sourced from countries with coal-dependent manufacturing, such as China. By 2025, inflation-adjusted prices for tow prepreg in the US remain 10–15% higher than pre-tariff levels.

This has led to increased costs, supply chain disruptions, and competitive pressure within the industry. The cycling industry, for example, heavily reliant on high-end carbon fiber components predominantly produced outside the US, could see price increases of hundreds of dollars for customers. 
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Strategies for Mitigating Carbon Fiber Costs Amidst Tariffs

Despite these tariff impacts, several strategies can help manufacturers mitigate the associated costs:

• Leveraging Purchasing Power: Manufacturing-as-a-Service (MaaS) providers, particularly those with strong domestic capabilities like Peninsula Composites, can offer competitive advantages. By leveraging our significant purchasing volumes of raw carbon fiber, we can secure lower material costs, offsetting higher domestic labor costs through volume discounts, and passing these savings onto clients.
• Engineering Expertise and Optimization: Providers with in-house engineering and composites experts can critically examine component designs and processes. This expertise allows for optimizations such as tweaking material layups to reduce the number of layers required for a part, or choosing different exterior quills that are more conducive to painting and UV clear coats, leading to reduced labor hours and improved aesthetics, potentially resulting in cost-neutral or even beneficial solutions.
• Supply Chain Resilience: Diversifying supply chains and investing in local sourcing and strategic partnerships are crucial measures to reduce reliance on imports and secure consistent material availability. While tariffs are impacting carbon fiber, the market for it is "pretty big," and material acquisition does not present a consistent issue.
• Raw Material Stock-Piling: A reputable and well established MaaS provider should have the capacity to store large volumes of raw carbon fiber for future projects, allowing their clients the ability to buy at a preferable rate and immunity from future price increases. This can also help to mitigate delays in production due to supply chain speed-bumps. 
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Understanding Carbon Fiber's Limitations

Despite its many benefits, carbon fiber cannot be universally applied to all products. For instance, it is generally unsuitable for applications requiring high thermal or electrical conductivity, such as heat sinks or electrical enclosures. Aluminum, with its superior heat resistance, thermal and electrical conductivity, and long-term stability, remains the material of choice for such critical functions where heat transfer and electrical grounding are essential.

In conclusion, while tariffs introduce volatility and increased costs across the manufacturing sector, strategically adopting alternative materials like carbon fiber offers a tangible pathway for manufacturers to maintain competitiveness and innovate. This approach, combined with leveraging engineering expertise and robust supply chain management, allows businesses to adapt to the evolving trade landscape and continue delivering high-quality products to the market.