U.S. Output Falls on Tariffs

According to the UK Shipping Customs website, the U.S. manufacturing sector contracted for the third consecutive month in May 2025. Due to the impact of tariffs,
supplier delivery and input times have reached their longest in nearly three years,raising fears of potential product shortages.
A recent survey by the Institute for Supply Management (ISM) revealed that President Trump"s aggressive trade policies have once again become a focal point of concern among manufacturers,
with suppliers passing on import tariffs to customers.

Some transportation equipment manufacturers stated that repeated tariff impositions have seriously affected suppliers" responsiveness and profitability. Computer and electronics manufacturers expressed concerns that tariffs,
coupled with government spending cuts, have significantly disrupted business.
Matthew Martin, a senior economist at Oxford Economics, noted that the outlook for manufacturing is gloomy. With the earlier demand boom having passed, businesses now face rising input costs,
supply disruptions, and cautious attitudes from both domestic and international customers regarding new orders.

ISM reported that last month"s manufacturing PMI fell to a six-month low of 48.5 from April"s 48.7. A PMI below 50 indicates contraction, and manufacturing accounts for 10.2% of the U.S. economy.
However, the PMI remains above 42.3, which ISM says still signals overall economic expansion.
UK economists had forecast the PMI to rise to 49.3. The survey showed that manufacturing sectors heavily reliant on imported raw materials have not benefited from eased U.S.-China tensions. Last week,
Trump announced plans to double tariffs on steel and aluminum imports to 50%.
While industries like furniture and electrical equipment reported growth, sectors such as transportation equipment and chemicals saw contraction.
Economists noted that chaotic tariff implementation and legal uncertainty—fueled by a court ruling voiding many of Trump"s tariffs, only for a higher court to temporarily reinstate them—make planning difficult for businesses.

Analysts stated that tariffs are adding pressure to single-family housing construction spending. According to a Commerce Department report, construction spending declined 0.4% in April following a 0.8% drop in March,
with single-family housing down 1.1%.
Transportation equipment manufacturers said that although automakers have raised prices to protect margins, poor collaboration with suppliers is pushing the latter into financial distress.
Electrical equipment and appliance makers noted that government-imposed tariffs alone have caused supply chain disruptions akin to the pandemic.
Chemical manufacturers stated that tariffs are always passed on to customers, with few companies absorbing them. Trump views tariffs as a revenue source and a tool to revive the industrial base,
but economists argue this goal is unrealistic in the short term due to structural issues like labor shortages.
ISM reported that the supplier delivery index rose to 56.1, the highest since 2022, indicating worsening delivery delays and supply chain bottlenecks. Port operators also noted a drop in cargo volume.
The import index fell from 47.1 to 39.9, the lowest since early 2009. The export index also declined, and consumer inventories hit a 15-month low. The input price index dropped slightly to 69.4 but remained elevated.


Information source:台灣新生報航運版20250604