US Factory Managers Concerned About Effects of Trump’s Tariffs

Bryan Mitchell/Bloomberg News

Very concerning. Two products eliminated. Commodity prices rising. Business planning “is at a standstill.”

That’s what a few American manufacturers said they’re facing as the Trump administration weighs tariffs on imported metals and Chinese products, creating uncertainty for companies that by most other accounts are going gangbusters.

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The threats of a trade war are worsening the headaches for factories already struggling to find the workers, supplies and delivery trucks to keep up with robust demand, according to a report May 1 by the Institute for Supply Management.

Overall, the ISM survey several showed the industry remains in a healthy, if constrained, expansion. “Business is off the charts,” according to a transportation equipment maker, while a producer in the computer and electronics sector said the “new-order rate exceeds shipment rate.”

Still, ISM’s factory index slumped in April to a nine-month low, signaling a moderating though solid pace of expansion. A measure of order backlogs was the highest in almost 14 years, and delivery times lengthened to match the second longest since 2010. The gauges for new orders and production weakened for a fourth straight month.

Tariff-related uncertainties may last another one or two months and probably will “work itself out,” said Timothy Fiore, chairman of the factory survey for Tempe, Ariz.-based ISM. “Overall demand remains very strong,” and manufacturers are “having trouble catching up,” he said. The shortage of qualified labor is a long-term constraint, Fiore added.

With assistance by Katia Dmitrieva, and Jeanna Smialek