While uncertainty abounds, a legacy tax credit could help weather the storm.

As the Trump administration moves forward with his tariff promises, hitting America’s biggest trading partners – we know for certain the impacts will be wide and felt across various industries. Fortunately for manufacturers, the Research and Development Tax Credit (R&D Credit) can help bridge the gap and provide the capital they need to remain competitive.

More excitingly, this decades-old incentive will have new life breathed into it, as Congress is poised to return R&D expensing to its prior, more powerful form. Additionally, the administration has also proposed to offer manufacturers full “bonus” expensing of machinery and equipment, instead of forcing them to amortize the expense over five years. These moves will provide manufacturers with more flexibility to deal with 2025’s changes.

The businesses I’ve talked to have typically dealt with the effects of tariffs in several key ways.

The quickest and most effective way has been to raise prices so that consumers absorb the added costs, but this risks alienating customers and driving them to lower-priced options. Another way we’ve seen manufacturers offset tariffs consists of finding alternate suppliers, either domestic or from other countries taxed at lower rates.

Manufacturers have also reformulated their products to rely on cheaper or more available raw materials, though redesigned products take weeks if not longer to bring to market. I’ve even seen companies uproot and move manufacturing operations. All of the above remedies have their own disadvantages – however, manufacturers have another, severely underutilized resource, at their disposal.