U.S. manufacturers are increasingly worried about the future of trade and rising raw material costs, according to the Q1 2025 NAM Manufacturers’ Outlook Survey released by the National Association of Manufacturers.
In NAM’s latest survey conducted from Feb. 11 to Feb. 28, trade uncertainties moved to the top of the list of manufacturers’ concerns with 76.2% of respondents saying it is their primary worry. This is a 20-percentage-point increase from Q4 2024, and a 40-point jump from Q3.
Increased costs for raw materials came in as manufacturers’ second highest challenge, cited by 62.3% of those surveyed.
Larger manufacturers were more concerned about tariffs and trade wars, while smaller manufacturers were more worried about the cost of obtaining raw materials.
When broken down by business size, 90.1% of large (500 or more employees) and 74.4% of medium-sized (50 to 499 employees) manufacturers cited trade uncertainties as their top business challenge. Meanwhile, 60.4% of small manufacturers (fewer than 50 employees) cited increased raw material costs as their top business concern, with trade uncertainties registering as the second highest concern at 58.3%.
Respondents were able to check more than one response; therefore, responses exceed 100%.
Manufacturers’ Outlook for their Own Companies
In the Q1 survey, 69.7% of survey respondents felt positive about their own company’s outlook, down slightly from 70.9% in Q4 2024.
However, if Congress fails to act now on extending the Tax Cuts and Jobs Act, 69.35% of survey respondents said they would delay purchasing capital equipment, while 45.23% would hold off on hiring, 44.72% would stall expansion of operations, 41.71% would limit R&D investments and 40.20% would curb increases in employee wages or benefits.
The Tax Cuts and Jobs Act of 2017 is set to expire at the end of this year.
“The pressure of increased costs, trade instability and sluggish demand is dampening the sector’s momentum, making it more difficult for manufacturers to plan, invest and hire,” NAM President and CEO Jay Timmons wrote in a social media post on Thursday.
“We are calling for a comprehensive manufacturing strategy that includes a commonsense trade policy in addition to making President Trump’s 2017 tax reforms permanent and more competitive, securing regulatory certainty, expediting permitting reform to unleash American energy dominance and key manufacturing projects and increasing the talent pool.”
Additional Survey Findings
- Manufacturers expect prices on their company’s product line to increase 3.6% over the next 12 months, up from 2.3% in Q4 and the highest level since Q3 2022 when inflation was still more than 8%.
- Manufacturers expect raw material prices and other input costs to rise 5.5% over the next year. This marks the highest anticipated rate of increase since Q2 2022, when inflation hovered between 8% and 9%.
- Manufacturers expect export sales to increase just 0.1% over the next 12 months, the lowest level since Q2 2020 at the height of the COVID-19 pandemic.
- Small manufacturers are more optimistic about their own company’s business outlook than larger manufacturers. The survey found 78.7% of small manufacturers were optimistic; 73.9% of medium-sized manufacturers were optimistic, and 60.5% of large manufacturers were optimistic.
