Trade war! In my previous column on China and digital manufacturing, I observed that the low price of Chinese imports has been artificially suppressing domestic investments in manufacturing automation. The process of digitization is expensive and risky, and rational investors and managers won't spend money if they know they will be immediately undercut by Chinese competitors.
Now President Donald Trump has amped up a trade war with China. The new tariffs will hit consumers in their wallets, as even Trump economic advisor Larry Kudlow agrees. Moreover, the trade war runs the risk of boosting inflation, raising interest rates, and potentially tipping the economy into recession.
But for companies in the digital manufacturing space, there's a silver lining to the dark cloud of the trade war. Suddenly the risk-benefit calculation of investment in digitization starts to look more attractive, purely as an economic proposition. For one, sourcing parts out of China is becoming riskier and potentially more expensive.