Tariff 'Chaos' Drags Manufacturing Gauge to Worst Since 2020
[Stay on top of transportation news: .]
A widely followed measure of Texas manufacturing activity weakened significantly as executives used words like “chaos” and “insanity” to describe the turmoil spurred by President Donald Trump’s tariffs, according to a report by the Federal Reserve Bank of Dallas.
A general gauge of business activity plunged to its worst reading since May 2020 based on recent survey responses from 87 Texas manufacturers, the Dallas Fed said April 28. While responses indicated modest current growth in production, company outlooks fell to a post-pandemic low as respondents pointed to frazzled supply lines and difficulty in forecasting.
Survey indexes tracking the prices of raw materials and finished goods came in well above average, and almost 60% of respondents said higher tariffs would negatively impact their business this year.
Even as a majority of companies said they would pass higher costs on to customers, some 38% said it’s becoming harder or much harder to do so. U.S. prices have increased more than 20% in the past four years, increasing concern that consumers may be fatigued, or have less spending power, to tolerate another ramp-up in inflation.
“The tariff issue is a mess, and we are now starting to see vendors passing along increases, which we will have to in turn pass along to our customers,” a respondent in the printing industry told the Dallas Fed. Another in food manufacturing said “tariffs and tariff uncertainty are wreaking havoc on our supply lines and capital spending plans.”
An executive in electronics manufacturing said, “We have already had to turn around and refuse shipments because customers cannot afford the tariffs, delaying our ability to build, which will eventually lead to job losses.”
Even companies with domestic inputs felt pressure because of a reduction in demand, one survey respondent said. Texas accounts for about 10% of total U.S. manufacturing.
One executive in the solidly Republican state told the Dallas Fed that “we believe the direction the current administration is leading our country is on target, but the pain to get there may be longer and more intense than originally anticipated.”
Want more news? Listen to today's daily briefing belowor go here for more info:
