Navigating Physical Product Design in a World of Tariff Uncertainty

In today’s globalized economy, product design is no longer just about creating a functional and desirable device — it’s about making tactical decisions in a rapidly shifting geopolitical and economic landscape. With ongoing global tariff uncertainty, choosing where and how to build your product has become a strategic business decision as much as a technical one.

The Tariff Tightrope

Over the past few months, trade tensions and shifting international policies have led to a volatile tariff environment. Hardware companies are now forced to weigh not only the cost of materials and labor, but the unpredictability of cross-border and international duties that can change product profitability overnight. A product designed and priced under one set of assumptions can become unviable if a 15% import duty is suddenly introduced.

Expertise and Infrastructure Matter

When designing complex hardware — think consumer electronics, IoT devices, robotics, or medical equipment — it’s not as simple as moving production wherever tariffs are lowest. Countries develop industrial ecosystems over decades. Shenzhen, for example, remains unparalleled in its concentration of PCB fabs, injection molding, assembly houses, and testing labs. Similarly, Germany excels in precision manufacturing and Japan in high-quality optics.

Relocating production to a country without the right ecosystem may lower your upfront tariff exposure but could increase your development time, reduce quality, and limit access to critical expertise. Worse, it may raise your total cost due to higher defect rates, slower iteration, or the need to import key components anyway.

Lead Times and Development Cycles

Hardware development, unlike software, can take 12–24 months to go from prototype to mass production. Factoring in design-for-manufacturing (DFM), tooling, compliance testing, and certification, any change in suppliers or manufacturing location can delay a product launch by quarters or even years. This means companies need to bake in flexibility early. Modular designs that allow for multiple sources of components, or partnerships with contract manufacturers in multiple regions, can help mitigate risk.

Looking Ahead

Designing hardware in the current global climate requires a systems-level mindset. It's not just about how the product works, but where it’s made, how fast it can be brought to market, and how exposed it is to geopolitical shocks.

Teams that consider tariff risk, leverage existing manufacturing ecosystems, and plan for development timelines will be better positioned to deliver resilient, scalable products — no matter what the next trade policy looks like. At Lexicon, that means working closely with our clients to determine manufacturing goals early on and designing for production processes that offer the right balance of design and sourcing objectives. We also work with experts in sourcing and logistics to help our clients navigate the complexities of international production and procurement.