Charles R. Goulding and Preeti Sulibhavi explore how 3D printing is transforming drone manufacturing and how Chinese drone tariff planning is influencing the global drone industry.
The global drone industry relies heavily on advanced manufacturing technologies, with 3D printing playing a crucial role in producing high-volume, lightweight components. This integration of 3D printing into drone manufacturing has revolutionized the industry by enabling rapid prototyping, reducing production costs, and facilitating intricate designs that are often impossible with traditional manufacturing methods. Countries like Turkey, Russia, and Ukraine have leveraged 3D printing to enhance their drone manufacturing capabilities, showcasing the transformative potential of this technology. As the industry continues to evolve, the intersection of drone technology, 3D printing, and international trade regulations, particularly concerning tariffs, presents both opportunities and challenges.
The U.S. Regulatory Landscape and Chinese Drone Concerns
DJI, the prominent Chinese drone manufacturer, controls 58% of the U.S. drone market. However, rising concerns over data security and surveillance have led to increased scrutiny from U.S. federal and state regulators. The issue came to the forefront with incidents involving Chinese data transmission balloons, highlighting potential surveillance risks. In response, efforts to circumvent potential U.S. tariffs and surveillance legislation have gained media attention, particularly with cases like the Anzu Robot drone.
The Anzu structuring has gained major media attention. Anzu Robot, despite operating out of Austin, Texas, is owned by a former DJI executive and uses DJI components manufactured in Malaysia and China. The same executive was formerly the CEO of another Chinese drone manufacturer. The drones resemble DJI’s Mavic 3 models and use software and servers provided by Aloft in Syracuse, New York. This purposeful setup illustrates the complex global supply chains and regulatory challenges involved in the drone industry.
Legislative Efforts to Strengthen U.S. Drone Manufacturing
New York Congresswoman Elise Stefanik, who achieved national acclaim for her cross-examination of the three Ivy League University presidents regarding campus protests, has been a vocal advocate for reducing the U.S. reliance on Chinese-made drones. She introduced the Drones for First Responders (DFR) Act on May 15, 2024, aiming to bolster the U.S. drone industry and enhance national security. Currently, 90% of drones operated by first responders are made by the People’s Republic of China. The DFR Act proposes:
Incrementally Increasing Tariffs: The Act would impose new tariffs on Chinese drones, starting at 30% and increasing by 5% annually. This measure is designed to make Chinese drones less competitive in the U.S. market, as it will impede the efforts Chinese suppliers will undertake when confronting higher tariffs.
Grant Program: Revenue from these tariffs would fund a new grant program to help first responders, critical infrastructure providers, and farmers purchase secure drones manufactured in the U.S. or allied countries.
Strengthened Rule of Origin: By 2030, the Act requires that drones imported to the U.S. not contain critical components made in China, ensuring that the supply chain for U.S. drones is secure and independent of Chinese control.
Stefanik’s initiative is supported by several colleagues and industry leaders who emphasize the importance of a strong domestic drone manufacturing base for national security and economic competitiveness. For example, Chairman Moolenaar and Congressman Rob Wittman have highlighted the unacceptable surveillance risks posed by Chinese drones and the need for U.S. independence in this critical technology sector.
The Role of the U.S. 3D Printing Industry
The U.S. 3D printing industry is well-positioned to play a significant role in mitigating the risks associated with Chinese-made drones. By promoting domestic manufacturing of drone components through 3D printing, the U.S. can reduce its dependence on foreign suppliers and enhance its technological sovereignty.
The Research & Development Tax Credit
The now permanent Research and Development (R&D) Tax Credit is available for companies developing new or improved products, processes and/or software.
3D printing can help boost a company’s R&D Tax Credits. Wages for technical employees creating, testing and revising 3D printed prototypes can be included as a percentage of eligible time spent for the R&D Tax Credit. Similarly, when used as a method of improving a process, time spent integrating 3D printing hardware and software counts as an eligible activity. Lastly, when used for modeling and preproduction, the costs of filaments consumed during the development process may also be recovered.
Whether it is used for creating and testing prototypes or for final production, 3D printing is a great indicator that R&D Credit eligible activities are taking place. Companies implementing this technology at any point should consider taking advantage of R&D Tax Credits.
Conclusion
The intersection of drone technology, 3D printing, and international trade regulations presents both opportunities and challenges. As the U.S. seeks to reduce its dependence on Chinese-made drones and enhance national security, leveraging advanced manufacturing technologies like 3D printing will be crucial. The legislative efforts led by Congresswoman Elise Stefanik highlight the need for a strategic approach to drone tariff planning and domestic manufacturing.
By investing in and promoting the capabilities of the U.S. 3D printing industry, the nation can build a robust and secure drone manufacturing base. This not only mitigates surveillance risks but also fosters innovation and economic growth. As the global drone market continues to expand, the U.S. must remain vigilant and proactive in its efforts to safeguard its technological and economic interests.
