Billionaire behind ‘American Factory’ firm warns of US exit amid trade friction with China

As one of the world’s largest automotive glass producers, and the subject of an Oscar-winning documentary, Fuyao Glass is a familiar name in the United States. Now, its founder has warned he is prepared to shut down his American plants if trade friction and tariffs cause severe losses.

Responding to questions regarding geopolitical risks at the company’s annual general meeting, Cao Dewang said that the company would not engage in loss-making ventures.

“How much in duties you want to impose is your business,” said the billionaire, who turns 80 next month. “If we encounter unreasonable situations, we’ll simply shut down the [US] factories.”

While Fuyao’s American roots stretch back to 1995, its presence is now anchored by its plant in Moraine, Ohio – a shuttered General Motors factory that Fuyao purchased in 2014.

The 2019 film American Factory documented the site’s transformation, tracing both its role in revitalising a depressed local economy and Cao’s harsh campaign against unionisation.

Today, Fuyao Glass employs thousands of American workers across facilities in Ohio, Illinois and South Carolina, supplying leading automotive manufacturers including General Motors, Ford and BMW in the United States, according to its website.

The company also holds the distinction of being the first Chinese firm to successfully sue the US Department of Commerce, winning a landmark case that virtually exempted Fuyao from anti-dumping duties in 2004.

09:42

Trump promises to bring US manufacturing back from China, but will his tariffs work?

Trump promises to bring US manufacturing back from China, but will his tariffs work?

Cao’s comments earlier this week – widely reported by Chinese media, including state-owned The Paper – came just over a year after US President Donald Trump launched his “Liberation Day” tariffs on major trading partners. The move ignited a renewed trade war with Beijing that saw duties on Chinese imports peak at 145 per cent before tensions de-escalated.



Source link

Hadrian opens ‘Factory of the Future’ in Alabama

Hadrian has opened a new advanced manufacturing facility in Cherokee, Alabama to support U.S. Navy Columbia- and Virginia-class submarine programs. The site, known as Factory 4, is designed to mass-produce critical components and help accelerate submarine construction.

 

The 2.2 million square foot facility will operate as a highly automated “factory of the future,” producing parts, assemblies and finished products identified as key drivers of submarine production timelines. Increased output is expected to reduce bottlenecks and enable faster delivery of submarines.

The project is funded through a public-private partnership combining $900 million in U.S. Navy investment with more than $1.5 billion in private capital. The total investment of over $2.4 billion reflects efforts to strengthen the maritime industrial base and expand production capacity.

The facility is also expected to create up to 1,000 high-paying jobs, supporting regional economic growth while addressing workforce shortages in the defence sector. Hadrian said its automated manufacturing platform will enable faster workforce training and improve production efficiency.

 

 

The opening comes as the Navy seeks to address long-standing capacity constraints in submarine construction. By shifting component manufacturing to dedicated facilities, shipyards can focus more resources on assembling submarine modules.

“Both chambers of Congress delivered the generational investment required to rebuild our shipbuilding capacity, bring those jobs back to Alabama and put American skilled laborers back at the center of American strength,” said Secretary of the Navy John C. Phelan. “I look forward to building on this progress together in the months ahead, because we are just getting started. This factory is the first of three facilities designed to address the most critical bottlenecks in the maritime industrial base.”

Officials described the approach as part of a broader strategy to increase production rates through distributed manufacturing. “We call this distributed shipbuilding, and it’s a key tenet of our plan to achieve required shipbuilding production rates,” said Jason Potter, performing the duties of Assistant Secretary of the Navy for Research, Development and Acquisition.

“These factories of the future might be several states away from the yards where the ships are ultimately built, but by taking on this work they reduce bottlenecks, having a profound effect on the speed of delivery,” he added.

 

 

Hadrian said the facility will reach full production capacity within 18 to 24 months, following qualification processes and initial production phases. By the third year, the site is expected to sustain operations through regular delivery of submarine components.

Company leadership said the project reflects a coordinated effort between government and industry to expand manufacturing capacity. “The Administration has set the strategy, Congress has cleared a path, the Navy has set the requirement, and Secretary Phelan has been unambiguous that private-sector partnership is foundational, not optional, to deter threats to national security. Industry has to answer that call with real execution, and the window to do it is now. We are proud to be part of the coalition building that capacity, and this factory is Hadrian’s commitment to meeting this moment,” said Chris Power, founder and CEO of Hadrian.

Lawmakers attending the opening highlighted the strategic and economic impact of the investment. “This investment marks a major step forward in strengthening our nation’s defense industrial base while bringing high-quality jobs and economic growth to Northwest Alabama,” said Representative Robert Aderholt.

Officials said the facility is part of a wider effort to modernise U.S. manufacturing and strengthen long-term defence readiness. The project is expected to play a key role in increasing submarine production capacity and supporting national security objectives.

 

Source link

Trump promised a manufacturing boom, but factory jobs continue to decline

William Brangham:

The U.S. job market has been cooling recently, and government data shows it’s only getting harder for Americans to find a job.

One sector that has proved tougher than most is manufacturing. President Trump has promised a manufacturing boom in both his terms, but while he’s been able to get pledges for more factory investment, the actual jobs inside those factories tell a different story thus far.

Economics correspondent Paul Solman has this report.

Paul Solman:

The Ohio State marching band and its featured instrument, the brassy sousaphone, emblem of school spirit and state pride, made just outside Cleveland.

Rob Hines, Sousaphone Buffer, Conn Selmer:

We handcraft everything. We have perfected the process for it and it’s been working for 58 years in our facility. And that’s what I think you get when you get that American craftsmanship.

Paul Solman:

Rob Hines, an American craftsman, sousaphone buffer at the Conn Selmer plant, where he’s worked for nine years.

Rob Hines:

It’s not an easy job. It’s a grueling job. But we do it because we love what we do.

Paul Solman:

And what they lovingly produce, which is why he and co-workers were stunned when the company suddenly said it will shutter the factory in June and relocate to China, shunting 150 people to the street.

Rob Hines:

It’s a lot of fear right now. A lot of people are afraid.

Wyatt Georskey, Sousaphone Buffer, Conn Selmer:

We’re talking about some of the best brass instrument craftsmen in the world going into job interviews and being told, well, that’s good and all, but you don’t actually have any skills.

Paul Solman:

Wyatt Georskey, another buffer. His future?

Wyatt Georskey:

I don’t know what I’m going to do. We’re all left in a limbo right now.

Paul Solman:

Of course, some of you have seen it as long as I have, manufacturing jobs on the wane ever since 1979.

President Donald Trump:

Jobs and factories will come roaring back into our country, and you see happening already.

Paul Solman:

It’s a trend President Trump has famously vowed to reverse with tariffs and domestic investment. Foreign leaders and business executives have frequently visited the White House grounds pledging to spend in the U.S. of A.

DONALD TRUMP:

In 12 months, I secured commitments for more than $18 trillion pouring in from all over the globe.

Paul Solman:

This number is widely thought to be implausible and almost assuredly includes commitments that were made before Trump’s second term. But there’s no contesting the fact that, since President Trump took office, the U.S. has lost nearly 100,000 manufacturing jobs.

The administration and its allies, however, tout their dedication to a turnaround.

John Paulson, Founder, Paulson & Co.: We need to protect American jobs and protect American manufacturing. We can’t have Americans, American producers closing American factories and offshoring.

Paul Solman:

And yet it’s this same famed investor, John Paulson, who owns the brass instrument factory. Paulson hosted a $50 million fund-raiser for President Trump during the 2024 campaign.

Rob Hines:

A lot of our members support Trump and believed in the administration.

Paul Solman:

Or did, claims Conn Selmer union Rob Hines.

And how are people feeling about it now?

Rob Hines:

Some people feel slighted. Some people are even questioning if Trump actually knows about the moves his allies are making in the dark. Some people still believe in administration. Some people feel let down.

Paul Solman:

In recent years, the company had already been moving parts to China, cheaper production, to buff the bottom line, but at a hidden cost, says Hines.

Rob Hines:

We have seen over the last year the quality deteriorate just from trying to integrate those foreign parts.

Paul Solman:

Wait, the myopic maximizing of shareholder value we have heard so much about? Or do the workers here just see what they want to see?

Rob Hines:

I don’t think it would be just because it’s in our interest. As somebody who works with these parts day in and day out, six days a week, we see the quality, and the employees have complained about the quality. And it’s fallen on deaf ears.

Paul Solman:

Meanwhile, the job attrition in Wyatt Georskey’s part of the plant.

Wyatt Georskey:

At times, it’s been over 100, and now we’re down to this group of 16 of us who are sending out the last American-made French horns and sousaphones and tubas.

Paul Solman:

Plus, there’s another cost often ignored when a plant goes under, the loss of internal community.

Rob Hines:

That’s just as big a weight as losing your job financially. I mean, it might sound kind of bizarre to say, but a lot of people are devastated, because we have people 40, 50 years have been working together.

Wyatt Georskey:

It’s been a tragedy, right, not only for community, but for bar buddies and friends everywhere.

Paul Solman:

But that too has been happening for eons. In fact, the destruction of all those jobs down on the farm is what helped create the manufacturing boom of the last century. But is there no way to protect American jobs from foreign competition?

The push now is, let’s get manufacturers from here and especially abroad to bring their manufacturing to the United States, which is then supposedly going to create more jobs than at least are here now.

Robert Lawrence, Harvard University:

The question is, how significant would those jobs be relative to the whole economy?

Paul Solman:

Trade economist Robert Lawrence.

Robert Lawrence:

We had a $1.2 trillion trade deficit in manufacturing last year. Suppose all the money that is going abroad would be used to buy American goods.

Paul Solman:

Even under such a fantasy, how much would actual factory floor jobs increase? Professor Lawrence estimates less than 1 percent. And, of course, American-made products would then cost more. In addition, he says:

Robert Lawrence:

If we were self-sufficient, what would it do to the opportunities for the typical worker in the United States who doesn’t have a college education? Would it create large numbers of employment opportunities? That’s basically what’s been driving our policies. And the answer is very little.

But, in addition, those jobs are increasingly likely to be displaced as a result of increased automation.

Paul Solman:

And perhaps increasingly likely to be overpromised, like two Ohio Intel plants.

Tim Bubb, Licking County, Ohio, Commissioner:

Intel promised 5,000 jobs into construction. We’re seeing less than half that, and 3,000 permanent jobs to man those two plants and manufacture silicon chips. Frankly, I think that’s overpromised and underdelivered, as they say.

Paul Solman:

Licking County Commissioner Tim Bubb, where the Intel project is located.

Is it an unrealistic expectation that we’re going to have lots more manufacturing jobs in this country than we used to?

Tim Bubb:

Well, I’m not going to go as far as unrealistic, but you don’t want to be overly optimistic. We’re still an expensive labor market. We have competitors around the world. It’s a world market now in Asia and other places that have been pretty darn competitive in manufacturing and shipping to this country.

Paul Solman:

More over, ads Bubb:

Tim Bubb:

One of the problems we have in this country is trained work force. You can move manufacturing plants back here, but who’s going to work in them?

Paul Solman:

But at the Alliance for American Manufacturing, the watchword is patience.

Scott Paul, President, Alliance for American Manufacturing: Just as it took a couple of decades for us to deindustrialize, I don’t think that we’re going to see immediate results in manufacturing.

Paul Solman:

Scott Paul runs the Alliance.

Scott Paul:

I’m optimistic that over time, we will see manufacturing job growth come out of both the massive amount of construction that’s going on right now, the trade deficit coming down a little bit, and a reshoring trend that was already under way before Trump became president.

Paul Solman:

So he says manufacturing jobs won’t be stuck forever at today’s lower level, and new corporate investment promised by Trump will be part of the renaissance. The U.S., he says, added a million manufacturing jobs between 2010 and 2019, when many thought that simply wouldn’t happen.

Scott Paul:

It’s not impossible to regrow the sector if we have the right policies. There might be a ceiling on the manufacturing job growth that we can see because of automation and productivity, but that doesn’t mean that we can’t grow the sector again over time.

Paul Solman:

Patience is a luxury for the likes of Wyatt Georskey, though.

Wyatt Georskey:

I’m not even thinking day to day. I’m thinking second to second. All I’m thinking is, can I get enough sousaphones out, can I get enough tubas out that they won’t close this plant at a whim because they see productivity dip?

All I can think about are the people around me and my duty to them and to our legacy to keep the place open just a little longer so we can get a few paychecks.

Paul Solman:

As of last week, the plant was still open, the paychecks still being issued. But the deadline seems to be the end of June.

For the “PBS News Hour,” Paul Solman.

Source link

Holland, Ohio Factory Employees Achieve Historic U.S. Manufacturing Milestone

Clarios Team Produces 50 millionth Advanced Car Battery for U.S. Customers

Holland, Ohio, March 04, 2026 (GLOBE NEWSWIRE) — Clarios employees at the company’s Toledo factory, located in Holland, Ohio, recently celebrated a significant U.S. milestone that underscores the strength of American manufacturing and innovation: the production of the 50-millionth Absorbent Glass Mat (AGM) battery at the facility.

Advanced AGM batteries start and power cars and trucks, delivering superior performance compared to traditional car batteries. AGM batteries are engineered to meet the rapidly growing electrical demands of modern vehicles. They support essential systems such as advanced safety features, connectivity technologies, advanced driver assistance system functions, and the increasingly complex electronic architectures found across today’s vehicle platforms. AGM batteries are difficult to produce but remain in high and growing demand.

Plant Director John Dimos credited the achievement to the dedication and ingenuity of the Toledo workforce. “Our Toledo employees power the innovation and excellence driving our growth,” said Dimos. “Their hard work made this 50-million-battery milestone possible. Toledo is a shining example of our commitment to making batteries in America – by Americans – for Americans.”

Since opening in 1981, the Clarios Holland/Toledo factory and its employees have been a cornerstone of U.S. battery production, producing millions of starting batteries and high-performance AGM batteries for the American automotive market. In fiscal year 2025 alone, the plant produced more than 6 million AGM batteries for American automakers and consumers.

Get the latest news


delivered to your inbox

Sign up for The Manila Times newsletters

By signing up with an email address, I acknowledge that I have read and agree to the Terms of Service and Privacy Policy.

Building on this momentum, the factory will soon begin manufacturing a new low-antimony AGM starter battery designed to support U.S. critical mineral independence and strengthen domestic supply chains.

Over the past 14 years, the Holland facility has been one of Clarios’ largest U.S. investment sites, with nearly $300 million dedicated to enhancing and modernizing the plant’s manufacturing capabilities. During this period, the plant has also expanded its workforce by nearly 75% and now employs more than 700 people in the greater Toledo area. These long-term investments underscore Clarios’ commitment to strengthening domestic battery production and supporting high-quality manufacturing jobs in the United States.

“I’m excited for the future,” Dimos added. “We have an opportunity to build on our history of success, further enhance a factory that supports workforce flexibility and work-life balance, and create a legacy we can be proud of.”

Beyond its manufacturing achievements, the Holland facility maintains a strong presence in the community through long-standing partnerships across the greater Toledo region. Clarios employees actively support organizations such as the Toledo Regional Chamber of Commerce, the Safety Council of Northwest Ohio, the Cherry Street Mission, United Way, the Toledo Mud Hens, the Toledo Walleye, the Ronald McDonald House of Northwest Ohio, and multiple local veterans’ initiatives. These commitments reflect the plant’s deep roots in the community and its role in helping strengthen the region far beyond the factory walls.

About Clarios

Clarios is the global leader in advanced, low-voltage battery technologies for mobility. Our batteries and smart solutions power nearly every type of vehicle and are found in 1 of 3 cars on the road today. With around 18,000 employees in over 100 countries, we bring deep expertise to our Aftermarket and OEM partners, and reliability, safety, and comfort to everyday lives. We answer to the planet with a rigorous sustainability focus, advancing best-in-class sustainability practices and advocating for them across our industry. We work to ensure 100% of our products sold are recyclable, and we recycle 8,000 batteries an hour in our network.

Media Contact

Eric Thiele

+1 414-807-8695

[email protected]

Contact Info

Christian Riedel

[email protected]

+49 173 99975410

Source link

US factory output hits one-year high as manufacturing sector recovers

US factory production increased by the most in nearly a year in January, offering hope for a manufacturing sector that has been squeezed by import tariffs and high interest rates.

Manufacturing output rose 0.6 per cent last month, the largest gain since February 2025, after being unchanged in December, the Federal Reserve said on Wednesday.

Economists had earlier forecast production for the sector, which accounts for 10.1 per cent of the economy, would rise 0.4 per cent. Output in December was previously reported to have risen 0.2 per cent.

Production at factories advanced by 2.4 per cent on a year-over-year basis in January.

Manufacturing has been hobbled by President Donald Trump’s sweeping tariffs, which business leaders say have raised costs for factories and consumers.

Trump has defended his punitive import duties as necessary to restore a long-declining domestic industrial base. The manufacturing sector lost more than 80,000 jobs last year.

Source link

US factory headcount falling despite Trump’s promised manufacturing boom

• US manufacturing jobs continue to decline
• Unemployment rate falls slightly, but job creation estimates revised lower
• Black unemployment rate rises, manufacturing sector loses 70,000 jobs since April

WASHINGTON, Jan 9 (Reuters) – U.S. manufacturing jobs in December continued an eight-month skid that began last spring after President Donald Trump rolled out aggressive import taxes that he pledged would lead to a resurgence of blue-collar jobs by reshuffling world trade to favor U.S. workers.

The reshuffling has certainly occurred, with the U.S. collecting around $30 billion a month in tariff revenue, spread among U.S. consumers, importers, and overseas exporting firms, and as firms first frontloaded goods abroad to stock their shelves with tariff-skirting inventory, then slowed their purchases and brought down U.S. import levels.

Sign up here.

But the blue-collar jobs boom hasn’t materialized, adding to the soured sentiment about Trump’s economic policies among households concerned about still-rising prices and uncertainty about the labor market.Data released on Friday showed the unemployment rate fell slightly to 4.4% in December from 4.5% in November, though estimates of job creation in prior months were revised lower, presenting U.S. Federal Reserve officials with a mixed message of a jobless rate that remains low by historic standards, but hiring trends that seem weak and job growth that seems narrow.

The latest data “is very much in line with the businesses I am talking to, which is that the low-hire environment continues. Some of it is uncertainty. A lot of it is productivity,” Richmond Fed President Tom Barkin said in comments to journalists. “It is hard to find businesses outside of the AI ecosystem or healthcare that are talking about hiring.”

Just ask J.B. Brown, CEO of BCI Solutions Inc., a small metal foundry in Bremen, Indiana, that sells to a range of agriculture and heavy equipment makers.

“Every time I hear that manufacturing is booming, I scream at the TV,” Brown told Reuters. His workforce is down to 130 from 240 people over the past 27 months. That’s the fewest the family-owned business has had since at least 1993, when he joined the company.

Brown said he eliminated a shift in September 2023 and has let attrition steadily reduce numbers since then. He said he could cut another 5% of his workers, if necessary, but he’s trying to avoid that to keep ready for the eventual upturn in orders. His capacity now stands at 52%, another low point. “I’ve never been below 70 to 65%,” he said. “This is our first time experiencing that.”

MANUFACTURING EMPLOYMENT LOWER THAN IN TRUMP’S FIRST TERM

The pace of job creation in the first year of Trump’s second term has fallen more than two-thirds from what it was in the final year under President Joe Biden, to an estimated 49,000 per month in 2025 versus 168,000 per month the prior year.

The unemployment rate has increased only modestly because the number of people looking for jobs has remained flat under Trump, with tougher immigration and deportation rules and enforcement curbing what had been steady labor force growth under Biden’s looser immigration policies.

“The healthcare sector is the only sector that is adding jobs right now, and it always does. It’s completely insensitive to the economic cycle,” Luke Tilley, chief economist at Wilmington Trust, said at a Maryland Bankers Association event on Friday.

Some parts of the economy have felt the pressure more than others. The Black unemployment rate has risen from 6.2% as of January, when Trump resumed office, to 7.5% the past two months. The white unemployment rate by contrast has been between 3.5% and 3.8% since April of 2024, and was below that for more than two years prior.

Shows hiring breadth in factory employment

Hiring in manufacturing, meanwhile, has been in the doldrums. The sector lost another 8,000 jobs in December, the Bureau of Labor Statistics estimated, and factory employment has dropped more than 70,000 since April to 12.69 million as of last month – the lowest reading since March of 2022. Construction jobs by contrast, while dropping in December, have continued the slow but steady growth seen throughout the post-pandemic era, goaded along recently by a boom in data-center investment.

The much smaller mining and logging industry has also been losing jobs, down to 608,000 as of December versus 626,000 in April.

That was the month Trump rolled out the “Liberation Day” tariffs that, while quickly scaled back after a brutal market reaction, set the stage for an upheaval in world trade and investment patterns that is still unresolved.

The U.S. Supreme Court is expected to rule soon on a case that challenged the legality of many of the tariffs imposed under national security laws but touted by Trump as a source of revenue and meant to reclaim U.S. manufacturing supremacy.

The path of employment since the new strategy was put in place, however, shows if anything how difficult it is to reshape labor market dynamics in a $30 trillion economy whose population is aging and in need of aging-related services, where growth is dependent on consumer spending that tends to be concentrated on services like education, healthcare, leisure, and restaurants, and whose workers command a wage premium that causes firms and managers to invest in productivity so they can make goods with fewer man-hours.

Manufacturing employment in the U.S. is now lower than it was for much of Trump’s initial term, which ran from 2017 until his loss to Biden in the 2020 election.

Shows US manufacturing employment

Overall, hiring has been narrowly focused, with a measure of hiring breadth showing more industries shedding employment than adding.

The economy is generating jobs based on what people want to buy and what firms can profitably sell, and so hiring patterns haven’t shifted all that much.

“Nothing in the…data points towards significant, near-term change to this now familiar pattern,” Laura Ullrich, director of economic research in North America at the Indeed Hiring Lab, wrote after the release of the December employment data. “That said, a low-hire/low-fire environment can’t last forever in a growing economy. While a long-stagnant labor market might not be as directly alarming as an obviously broken one, it can still feel quite broken for many job seekers.”

Reporting by Howard Schneider; Addtional reporting by Tim Aeppel; Editing by Andrea Ricci

Our Standards: The Thomson Reuters Trust Principles., opens new tab

Purchase Licensing Rights

Covers the U.S. Federal Reserve, monetary policy and the economy, a graduate of the University of Maryland and Johns Hopkins University with previous experience as a foreign correspondent, economics reporter and on the local staff of the Washington Post.

Source link

US Factory Jobs Keep Falling Despite Trump’s Manufacturing Revival Push

US manufacturing employment has continued to decline despite former President Donald Trump’s repeated claims of an industrial revival driven by tariffs and reshoring policies | Image:
Pexels

US manufacturing employment fell again in December, extending a steady decline that has now lasted most of 2025, underscoring the gap between political promises of an industrial resurgence and labour market realities.

According to government data, factory payrolls have dropped by more than 70,000 jobs since April, pushing total manufacturing employment to around 12.7 million, the lowest level in over three years. The sector has now recorded job losses in eight of the past nine months.

Tariffs Fail to Deliver Hiring Boost

President Donald Trump has repeatedly argued that tariffs and protectionist trade policies would revive domestic manufacturing and bring factory jobs back to the US. Tariff collections have surged, generating tens of billions of dollars in revenue annually, but manufacturers say higher input costs and supply-chain uncertainty have offset any benefit from reduced import competition.

Many firms have opted to invest in automation or overseas capacity rather than expand domestic headcount, limiting the employment impact of reshoring initiatives.

Also read: ₹1.7 Lakh Crore Raised Through IPOs in FY26: SEBI

Broader Jobs Growth Masks Factory Weakness

While overall US employment growth has remained positive, driven largely by healthcare and services, manufacturing has emerged as a weak link. Economists note that factory hiring tends to slow earlier in economic cycles as companies respond quickly to changes in demand and costs.

The unemployment rate edged lower in December, but analysts say this largely reflects slowing labour force participation rather than strong job creation in goods-producing sectors.

Structural Challenges Weigh on Outlook

Industry executives cite multiple headwinds facing US manufacturing, including higher borrowing costs, rising wages, energy price volatility, and slowing global demand. Even companies expanding production capacity are increasingly relying on technology rather than labour-intensive processes.

As a result, economists warn that a sustained rebound in factory employment is unlikely without broader investment incentives, stable trade policy, and stronger demand growth.

Despite aggressive rhetoric and rising tariff revenues, the long-promised revival in US factory jobs has yet to materialise. For now, manufacturing remains a drag on the labour market, highlighting the limits of trade policy as a tool for job creation.

-With inputs from Reuters

Also read: SC Rulings Loom as Trump’s Tariff Authority Faces Fresh Legal Scrutiny

Source link

US factory sector contracts for 10th straight month in December

By Dan Burns and Lucia Mutikani

WASHINGTON, Jan 5 (Reuters) – U.S. manufacturing activity slumped to a 14-month low in December, with new orders contracting further and input costs grinding higher as the sector continued to bear the imprint of President Donald Trump’s import tariffs.

The Institute for Supply Management survey on Monday suggested a recovery was unlikely in the near-term, but ​economists were hopeful of a turnaround this year as Trump’s tax cuts took effect.

Comments from survey respondents continued to single out tariffs as a problem, with some manufacturers of chemical products saying ‌they hoped “for some return to free trade, which is what consumers have ‘voted for’ with their spending.”

Trump has said the tariffs are bringing in hundreds of billions of dollars in new revenue to the U.S. Treasury and that they are improving U.S. economic security.

But ‌beyond the sectors lifted by an Artificial Intelligence investment boom, Trump’s sweeping import duties have undercut manufacturing, even as he touts them as necessary to shore up a long-declining domestic factory base.

Economists have argued it is impossible to restore the industry to its former glory because of structural issues, including worker shortages.

“While a less fluid trade environment and somewhat more favorable business tax environment are positives for activity, we remain cautious on the extent of recovery in traditional cap-ex categories this year,” said Shannon Grein, an economist at Wells Fargo.

The ISM said its manufacturing PMI dropped to 47.9 in the final month of 2025, the lowest level since October 2024, from 48.2 in November. ⁠A reading below 50 indicates contraction in manufacturing, which accounts for 10.1% of ‌the economy.

It was the 10th straight month that the PMI remained below the 50 threshold. Economists polled by Reuters had forecast the PMI would be little changed at 48.4. The PMI remained above 42.3, a level that ISM said over time was consistent with an expansion of the overall economy.

Last month’s drop reflected pullbacks in ‍the production and inventories sub-indexes after they improved in November.

“Their contraction this month continues the short-term ‘bubble’ of improvement indicative in the last several months of PMI data, and a hallmark of recent economic uncertainty in manufacturing,” said ISM Manufacturing Business Survey Committee chair Susan Spence.

Last month, 85% of the manufacturing economy’s gross domestic product contracted, a surge from 58% in November, and the percentage of manufacturing GDP in strong contraction increased to 43% from 39% in November, Spence said.

Story Continues

COMMENTS FROM RESPONDENTS ​ARE DOWNBEAT

Electrical equipment, appliances and components as well as computer and electronic products were the only two industries reporting growth. The remaining 15 industries, including chemical products, miscellaneous manufacturing, machinery and transportation equipment, reported a ‌contraction.

Some makers of fabricated metal products reported that “order levels have continued to decline.” They noted that December was “dismal,” adding “January and February don’t look too good, as bookings are down 25 percent compared to the first two months of 2025.”

Computer and electronic products manufacturers said “margins have deteriorated, as full pass- through of cost increases is not possible.” Transportation equipment makers said that while many customers were ordering for 2026, “those orders are 20 percent to 30 percent below their historical buying patterns,” adding “the general mood of the industry is that the first half of 2026 will be another bust.”

Some electrical equipment, appliances and components manufacturers said “things look a bit bleak overall.” Some makers of miscellaneous products reported that “2025 revenue was down 17 percent due to tariffs.”

The U.S. Supreme Court is set to rule on the legality of the premise Trump has employed for his tariffs sometime ⁠in early 2026. Yale Budget Lab estimated that Trump’s protectionist trade policy raised the average tariff on imported goods to ​nearly 17% from less than 3% last January.

The ISM survey’s forward-looking new orders sub-index was little changed at 47.7 in December ​from November’s 47.4, marking a fourth straight month of falling demand. This measure has contracted in 10 of the last 11 months with demand curbed by the rise in some goods prices because of the tariffs.

Its measure of manufacturing inventories dropped 3.7 percentage points to 45.2 last month. The production index eased to 51 from 51.4 in November.

Factory ‍input costs, which have contributed to the persistence of ⁠inflation that continues to run above the Federal Reserve’s 2% target, remain elevated. ISM’s prices paid index was unchanged at 58.5, higher than forecasts for 57.0.

Amid the soft demand environment, factory employment declined for an 11th straight month, the sector’s longest hiring slump by ISM’s measure in about five years.

The ISM noted that for every comment on hiring, there were three on reducing head counts, ⁠adding that companies continued to focus on accelerating staff reductions due to uncertain near- to mid-term demand.

“A number of tariff deals have been struck and many exemptions have been granted over the past two months, and I would expect more of that in ‌the new year,” said Stephen Stanley, chief U.S. economist at Santander U.S. Capital Markets.

“It remains to be seen whether that will be enough to pull the factory sector out of ‌its current malaise,” he added.

(Reporting By Dan Burns and Lucia Mutikani; Editing by Chizu Nomiyama and Alexander Smith)

Source link