We are now a month into 2026. Between global chaos and Winter Storm Fern (hopefully it was AI that picked such a lousy name), this year already feels like it has been going on forever.
One thing I have learned over my life is that it is nearly impossible to accurately predict the future. Ten years ago, I certainly would not have predicted the world we live in now. The rise and use of AI was not what I expected, and I did not believe that I would have to write about tariffs this often.
Even with that said, it is worthwhile looking to the future and making the best predictions based on the previous information. We will see if I was correct or if I am wildly off base.
Here is what I observed in 2025 and believe will continue into 2026.
AI is coming to manufacturing but slowly.
MTG has partnered with Overview.ai and Accella over the past year. They are great companies with products that I believe will make a huge difference in manufacturing. Companies are seeing it as well, but the adoption period is slower than expected. Companies are cautious right now as we live in a time of sluggish demand and rising costs. AI might be great, but it is not yet a proven technology. The potential for radical change is too uncertain to spend considerable resources on it.
Many companies are looking for a China +1 solution even if they do not understand what that entails
More and more companies want to diversify their operations away from China but have shockingly little idea of what is required to meet that goal. We repeatedly see companies that underestimate the time commitment, resource requirements, and the price of a new supplier. Change is never easy and companies should expect that there will be at least some pain to make the move.
There is a rise in building new manufacturing outside of China
Last year, we received more requests than ever before to develop manufacturing facilities outside of China. The requests are from all over the world. It is a good thing in some ways but the path to better manufacturing is a long one. It will take years for companies to reach the same production levels in the new locations. It is a positive step as too much concentration of manufacturing is not good for global reliance and because manufacturing is a great way to lift the economic standards of a country.
There is still a need for help in China but not from American companies
We have seen more companies outside of the US ask for assistance in China than ever before. The need still exists, especially for companies that are not as dependent on the US market. African, European, and Canadian companies are coming to us more. That will continue as we see American companies struggling to figure out what to do next.
China remains the primary destination for startup products
A majority of requests we received from American companies over the past year is for startup products, typically consumer electronics. These startups know that China is still the primary location for electronics manufacturing. Nowhere else has the combination of skills, suppliers, and infrastructure to support this type of manufacturing. These conversations, at least to start with, do not touch on tariffs. I expect to see more of these types of companies in the future.
My Predictions for 2026
Here is where I may be in the most trouble. There are many famously bad predictions throughout the years. I have made a few bad predictions myself though, thankfully, none of them were recorded for posterity. It is important to plan for the future even if it is fundamentally uncertain and unknowable.
There will be no military standoff between Taiwan and China
I have written many times in the past that there will not be any military standoff between Taiwan and China. The costs are too great and the rewards not worth the effort. Cooler heads will prevail and the status quo will continue.
The US will become more sidelined in the international economy
The failures of the tariffs and the rule of law in the United States mean that the country will become dominant than it currently is. Countries will make more trade deals that exclude the US, like Canada and China, and countries will become wary of investing in the US economy. In time, that is likely to change; however, the US will need to work hard to retain its standing in both the global economy and the political realm.
The AI Bubble will pop
I have come around to the possibilities and potential utility of AI for certain tasks. It is a valuable tool that everyone should understand and learn how to use effectively. Will it break the world and completely change everything? No, probably not. The insanely lofty promises of AI and the ridiculous amount of money being spent on it are not sustainable and the industry is likely to burst. In the short term, the AI bubble burst will be bad for the US and global economy as it is one of the few growth areas. It the medium term, it will be a good thing as people will be able to see the technology for it is and what it is not and use it effectively. I look forward to the days that AI is talked about as useful tool and not the savior (or villain) of humanity.
These are the predictions that I feel the most confident about. We will reassess this time next year. Maybe I will be wrong and there will be a war in Taiwan fought by AI robots led by a resurgent US. Unlikely but possible. On a serious note, it is important to make reasonable and rational predictions for the new year.
What are your thoughts? What do you predict for the rest of 2026?
What can MTG do to help you improve your operations?
