One of the key promises behind President Donald Trump’s tariff strategy was to revive US manufacturing. However, the policy intended to lay the foundation now has the opposite effect.
For the past three months, US manufacturing has been contracting as President Donald Trump and his administration have been working to finalize tariff rates for dozens of countries and product categories.
“57% of manufacturing GDP was contracted in May,” Susan Spence, chairman of the Supply Management Institute’s Manufacturing Research Committee, said at a press conference on Monday. “That’s increased from 41% in April. The contraction is deepening.”
Manufacturing continues to sign contracts in May
The Institute’s Purchasing Manager Index fell to 48.5% in May, 0.2 points lower than 48.7% in April. A consistent number below 50% means that the manufacturing industry is contracted.
\“The headwinds caused by rising tariffs are beginning to appear in economic data,” writes Bill Adams, Chief Economist at Comerica. “ISM manufacturers report tariffs are business resistance, just as uncertainty about where tariffs will settle in the long run.”
As part of our monthly report, the Supply Management Institute includes anonymous estimates from the survey panel on current business conditions. In the latest release, all comments touched on tariffs. One manufacturer expressed cautious optimism about the easing of tariffs in May, but was concerned about the ongoing uncertainty.
“While the relaxation of tariff rates between the US and China in May is welcome, tariff whip will continue. The question is what will happen in 90 days. We are doing extensive work to plan emergency situations.
What the manufacturer said about the customs duties in May
Below, managers from various industries reported how tariffs affected in May, according to what was cited in the Supply Management Institute release.
The Trump administration is seeking the country’s best offer
“Production is frozen,” Spence said Monday. “Growth cannot resume until customs policies become clear.”
Can some of the uncertainties surrounding customs duties be resolved immediately?
An exclusive report from Reuters on Monday said the Trump administration set a June 4 deadline and set a deadline for the country to give the US a final tariff offer. The deadline will be five weeks before the July 8th deadline or a 90-day suspension set on April 9th.
The US economy is still growing
Monday’s report wasn’t bright for manufacturers, but it shows that the broader economy is still growing. If the manufacturing index is above 42.3%, it generally indicates that the economy is still expanding.
“The commodity production sector of the economy is likely to be contracted in 2025,” Adams wrote. “However, industries that provide services that account for most economic activity and employment are likely to continue to grow and help the economy avoid a recession.”
