Rapidly flickering changes in White House trade tariff policy are introducing “significant uncertainty” into the warehouse automation market, affecting investment decisions, supply chain strategies, and logistics infrastructure, according to an analysis from the U.K. market research firm Interact Analysis.

The impacts of the unpredictable business conditions will likely force various change in different global sectors, Interact Analysis Research Manager Rueben Scriven said. Specifically, third party logistics providers (3PLs) and warehouse construction companies may actually experience growth, while vendors of durable manufacturing automation in Southeast Asia, Canada, and Mexico are likely to see slowdowns.

At the same time, the 25% steel tariff is set to reduce return on investment (ROI) for automation investments across the board, the firm said. In a report, Interact Analysis described six of the most significant effects of these tariffs on the warehouse automation market:

·a slowdown in capital investments in warehouse automation, driven by increased economic uncertainty. Automation vendors say their customers are becoming increasingly concerned, leading to delays in major automation projects.

·as tariffs add complexity to supply chains, more companies are likely to outsource logistics to 3PLs that specialize in managing trade policy shifts, supplier diversification, and fulfillment automation.

·many companies are expected to build up inventory reserves in a bid to avoid potential disruptions. That would lead to increased warehouse occupancy as businesses seek alternative sourcing strategies during supply chain restructuring plans.

·before the latest tariffs, manufacturers had been shifting production to Southeast Asia, Canada, and Mexico in response to the U.S./China trade war and post-pandemic nearshoring trends. But the spike in trade policy uncertainty means businesses are likely to pause large-scale automation investments in these regions until they see greater clarity on future tariff levels.

·warehouse automation equipment could see significant cost increases due to the 25% tariff on steel, whether vendors are domestic or international. Systems relying heavily on steel include robotic solutions, conveyor belts, and storage infrastructure.

·changes in e-commerce flows will result from changes to the “di minimis loophole” that has historically allowed international shipments with a retail value of $800 or less to bypass U.S. import taxes and customs inspections. In response, Chinese discount retailers such as Shein and Temu could begin leasing more fulfillment space within the U.S.