Manufacturers Scramble to Beat Threat of Tariffs
The impending threat of tariffs has pushed manufacturers to amp up their output, Tim Fiore of the Institute for Supply Management told the Wall Street Journal this week.
“There’s an extreme amount of activity going on to account for impacts that are driven by the aluminum and steel tariffs, and that is expanding out to other industries,” said Fiore, who oversees ISM’s monthly survey of factory purchasing and supply managers.
Released ahead of the Fourth of July holiday, ISM’s latest survey showed that its overall index rose to 60.2 in June from 58.7 in May. Within that composite index, the production, inventory and supplier deliveries indices were up from the previous month, while the indices for new orders, employment and prices all registered declines.
Manufacturers’ comments cited by ISM all pointed to the impacts of the Trump administration’s plans to impose broad-based tariffs on China and European Union countries as well as the United States’ northern and southern neighbors. “The uncertainty of U.S. tariffs and the Canada/Mexico/E.U. retaliatory tariffs continues to cloud strategic planning efforts,” said one manufacturer.
Within the fabricated metal products sector, one manufacturer reported, “The Section 232 steel tariffs are now impacting domestic steel prices and capacity. Base steel prices have already increased 20% since March.”
A food and beverage manufacturer that exports to more than 100 countries told ISM, “We are preparing to shift some customer responsibilities among manufacturing plants and business units due to trade issues (for example, we’ll shift production for the China market from the U.S. to our Canadian plant, to avoid higher tariffs). Within our company, there is a sense of uncertainty due to potential trade wars.”
Numbers above 50 in ISM’s indices suggest that activity is expanding across the manufacturing sector, while numbers below 50 indicate contraction. The overall ISM index in February hit 60.8, its highest level since May 2004, before dropping off in March and April. It picked up again in May and June.
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- ◦Economy
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