Manufacturing in Limbo: How Tariff Turbulence Is Reshaping U.S. Production

The U.S. manufacturing sector continues to navigate choppy waters, with the latest data revealing just how fragile conditions remain amid an ongoing tariff storm.  

According to the Institute for Supply Management’s (ISM) May Purchasing Managers’ Index, the sector contracted for another month – clocking in at 48.5%, down slightly from April. While production managed a modest rise, up to 45.5%, the deeper story lies in what’s vanishing: inventory and imports. And that’s worrying.  

After months of bracing for tariff hikes by pulling stock forward, manufacturers are now burning through those reserves. The result? Backlogs are thinning, and fresh supplies aren’t coming in fast enough. Imports dropped dramatically – down 7.2 percentage points to 39.9%, marking their lowest point since the Great Recession in 2009.  

Production may be up slightly, but it’s running on fumes. Without steady inbound materials to replenish inventory, even the modest gains we’re seeing are on borrowed time.  

With steel and aluminum tariffs set to rise to 50% soon under the Trump administration’s renewed protectionist policies, U.S. manufacturers are once again bracing for cost shocks. Many companies are still locked in disputes over who shoulders these ballooning import expenses – adding to congestion at ports and further slowing deliveries. 

Meanwhile, S&P’s PMI data offered a glimmer of hope, showing a sector in mild expansion at 52%. But even that optimism is fragile. The growth was driven more by domestic demand, while foreign orders remained sluggish – another symptom of tariff strain.   

In this dual reality, some firms are cautiously upbeat about trade stability, but that sentiment may be premature. ISM’s full-year revenue outlook remains essentially flat, with expected growth of just 0.1%. In other words, there’s little margin for error.  

What Should Manufacturers Do Now?  

With uncertainty now the only constant, manufacturers face a critical choice: hunker down and wait, or adapt strategically.  

Here’s what adaptive looks like:  

• Diversifying sourcing to minimize exposure to any one tariff-hit region  

• Strengthening digital supply chain visibility to react faster to disruptions  

Aquatio Software is helping manufacturers do just that – enabling resilience by digitizing shipping workflows and elevating visibility across the value chain. With real-time insights and workflow automation, manufacturers can anticipate bottlenecks, re-route shipments, and maintain momentum even when external shocks hit.  

• Collaborating across the value chain to reassign risk and cost more fairly  

This moment isn’t just a test of endurance – it’s a call to modernize operations, so they’re built for volatility.  

Bottom Line 

If the current import drought becomes the new norm, production slowdowns won’t just be a threat – they'll be a reality. The time to act isn’t when shelves are empty, but while there’s still something left in stock.   

Stay tuned as we track how manufacturers are reshaping in response to shifting policies, global instability, and the ripple effects they create on the shop floor.