Many posts have dealt with tariffs and trade.
One benefit of U.S. tariffs on foreign imports is that they are supposed to spur an increase in domestic manufacturing. So far, tariffs seem to be having the opposite effect.
A closely followed survey of manufacturers indicated that the sector contracted for the sixth straight month in August, despite some signs of improvement. However, the data also showed that manufacturers struggle to handle the impact of tariffs while contending with higher prices for materials and lower spending from cautious buyers.
The Institute of Supply Management (ISM) manufacturing sector Purchasing Managers’ Index (PMI) improved to 48.7 in August, but still fell short of the 50 mark that indicates growth.1 The data showed that high input prices and elevated supply pressures from tariffs helped to wipe out improvements in new orders and employment levels.
“Uncertainty around tariff policy is limiting activity,” wrote Wells Fargo economists Shannon Grein and Tim Quinlan.2 “While the higher costs associated with tariffs are a challenge, the uncertainty around where tariffs ultimately land is likely more so limiting current activity today.”