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💴 This Week in Manufacturing

If you’ve been waiting to see how the latest round of tariff actions would ripple through the U.S. manufacturing economy, this week offered a flood of evidence. On June 4, the Trump administration implemented sweeping 50% tariffs on steel and aluminum imports, doubling down on a strategy framed as economic self-defense. But for small and mid-sized manufacturers—who already operate with tight margins and depend on stable input costs—this policy shift landed like a sledgehammer. From tin-can producers warning of job losses to auto suppliers delaying expansion plans, the feedback loop is already forming: rising input costs, stalled capital spending, and shrinking factory order volumes.

This isn’t a theoretical policy experiment—it’s playing out in real time on shop floors across the country. As detailed in our monthly report covering ISM data, May marked the third straight month of manufacturing contraction, with inflationary pressures and material delays increasingly linked to tariff uncertainty. Factory orders fell 3.7% in April, led by a staggering 17% drop in transport equipment—a sector heavily exposed to global supply chains. Even as reshoring rhetoric remains strong, companies are shifting production to Mexico or Southeast Asia rather than coming back to the U.S.—a telling sign of how tariffs alone can't rebuild domestic capacity.

Yet amid the disruption, responses are emerging. When reviewing our headlines, the National Association of Manufacturers has proposed a new Manufacturing Investment Accelerator to ease the burden on domestic firms, and Republican lawmakers are floating carbon border adjustments as a strategic alternative to blanket tariffs. Meanwhile, the Inflation Reduction Act continues to deliver billions in clean-tech manufacturing investment—proof that smart, targeted policy can catalyze industrial momentum.

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⚙ Manufacturing Headlines

• U.S. Tariffs Are a Big Win for Mexico, Report Finds [Investopedia]

• Canned foods get more expensive due to Trump's tariffs on steel [NY Post]

• US aluminium tariffs threaten scrap clash with European Union [Reuters]

• The Maga case for carbon pricing [Financial Times]

• To Drive Domestic Growth, Manufacturers Propose U.S. Manufacturing Investment Accelerator Program [National Association of Manufacturers]

MONTHLY REVIEW

♨️ US Manufacturing Insights - May

U.S. manufacturing in May 2025 presented a mixed picture of modest growth and persistent headwinds.

The manufacturing sector is showing modest growth against powerful economic currents. The S&P Global Purchasing Managers’ Index (PMI) for manufacturing climbed to its highest level since early 2025, signaling the strongest improvement in factory conditions in several months.

According to ISM’s Report On Business, the May Manufacturing PMI® registered 48.5%, a slight dip from 48.7% in April, and firmly below the neutral 50 mark. This reading marks the third straight month of contraction in the U.S. manufacturing sector, after a brief two-month expansion earlier in the year. However, industry investments in food and pharmaceuticals have continued to grow.

Upshot: Looking ahead, the U.S. manufacturing sector faces a cautious road, balancing short-term headwinds against longer-term opportunities.

FROM THE FEED

📱The busiest donut factory in the world!

🤨Did You Know?

The U.S. food industry has a reported annual sales of

$1.3T

and international distribution accounts for 18%.

^{Source: Nationwide}

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