On Thursday, May 15th, 2025, the Sip Club, hosted by Expandable Software, MIE Solutions, and Mirador Software Group, was pleased to welcome nearly 70 attendees from across the manufacturing industry—as well as other professionals, consultants, and experts—to discuss “The Impact of the 2024 Election on U.S. Manufacturing,” and featured valuable insights from Grace Speckman, CFP®, at Evans May Wealth, who brought a data-driven perspective on the manufacturing sector’s economic outlook.
Perspective Is Everything
Whenever evaluating economic performance, perspective—and time—are critical. Investors should take a longer-term view of performance, as the short term tends to present greater fluctuations in performance over time, while the longer-term perspective tends to “smooth out” those fluctuations.
In the last 100 days, it seems that the market has been very chaotic with wild performance swings. But when looked at over a longer period, they have been less so. The Schwab Center for Financial Research with data provided by Bloomberg as of December 31, 2024, looking at Bull vs. Bear markets from 1962 to 2022, indicate that Bull markets have dominated the U.S. economy during that period, while Bear markets have been less frequent and of shorter duration. In the same period, the S&P 500 Price Index has steadily increased with some notable declines around certain events in 2002 and 2010 and again in 2020 with the Covid-19 outbreak.
There was another significant drop in April 2025 on “Liberation Day,” but the market has made a partial recovery towards January 2025 levels.
Another key indicator for manufacturing companies is Job Growth. Bloomberg data shows a sharp decline in March, 2020 —the Covid-19 impact—followed by significant gains through December, 2022. Since then, job growth has declined to the point where we are near pre-pandemic averages. It should be noted, however, that the majority of the growth in jobs has been in the Services Producing sector, with the Goods Producing Sector (i.e., manufacturing) showing large increases post-pandemic but declining in recent years.
All of this leads to a “Ride It Out” strategy for Investors—and consumers.
What Does that Mean for Manufacturing?
The April 2025 Manufacturing ISM® Report On Business® provides a less than favorable picture for manufacturing companies. The Manufacturing Purchasing Managers’ Index (PMI)—a survey-based economic indicator that tracks the activity level of purchasing managers in the manufacturing sector—shows that it is contracting/declining. Orders, production and employment in the sector are all contracting, Deliveries are slowing, inventories are growing, and prices are increasing. Overall, the Manufacturing Sector is contracting at an increasing rate even though the overall economy is growing, albeit at a slower rate than previously.
Let’s Talk Tariffs
The bottom line on tariffs is that they are paid by the importer. The economic burden of tariffs fall on a company—and potentially the consumer. This has recently been validated in the marketplace by Amazon, Walmart and Nike, just to name a few. The swings in tariff rates have been significant and highly volatile.
Where Are We Currently with Tariff Policy?
- 10% baseline as of April 5 (unless a country specific rate has been imposed)
- 125% on Chinese goods (down from 145%)
- May 14—a 90 day pause on tariffs, reduction to 30% on China, 10% on US
- 25% on all imported cars as of April 3
- United States-Mexico-Canada Agreement (USMCA)—exempt from the 0% baseline, 25% on autos
- US/UK trade deal May 8—0% on steel and aluminum, 10% tariff for the first 100K auto imports
- Goldman Sachs expects the effective US tariff rate will increase 13% in 2025 (compared to a 4% increase in 2024), as of May 14, 2025
What Does That Do to US Manufacturing?
The Impact is highly dependent on sector, product and company, and basically unpredictable. They could result in a combination of higher prices, tighter margins, and cost potentially passed on to consumers.
The Fed report estimates 2025 tariffs so far led to a 0.1 percent increase in core PCE prices (goods and services prices, excluding food and energy), as of May 9, 2025.
The thinking is that high tariffs will incentivize US companies to re-shore production and bring manufacturing jobs back into the United States.
Semiconductors/tech and pharma are an example:
- Pledges have been made by Nvidia (push to make all Blackwell chips in US – $500B), Taiwan Semiconductor ($100B investment- mostly Phoenix), Apple ($500B over next 5 years)
- Eli Lilly announced new plants, built over 5 years ($27B)
But this takes time. The production ramp cycle is industry-dependent, but it takes time to build new infrastructure, anywhere from 3 to 60 months with significant capital investment required.
Manufacturing cannot establish new factories quickly; much of the equipment needed to expand capacity may also come from offshore and be tariff-laden, and finding skilled (and willing) factory workers can be challenging.
If there is a silver lining to this, it is that conditions like these can spur both manufacturing expansion and innovation. In addition, there is more than one way to optimize manufacturing costs besides attacking material and labor costs. Walmart has focused on supply chain diversity and reductions in freight, shipping and handling costs. In addition, they have indicated that the increased costs generated by tariffs may be spread over all products rather than tariff-specific products, reducing the Consumer impact.
The Bottom Line: What Do We Do?
Our options are limited, but there are options.
- Stay calm and stick to your strategy; don’t act on emotion. Take a longer-term view of the market and understand the cycles in the economy. “Ride It Out”
- Make fewer unforced errors; the market rewards patience.
- Missing “best days” can hurt performance—missing the 10 best days resulted in 45% in missed value in 2014-2024, the best 20 60% missed .
- Look for ways to optimize manufacturing operations beyond reductions in material and labor costs.
- Consider whether adoption of AI solutions can assist in production optimization.
- As always in manufacturing: Plan for the Worst and Work for the Best.
Thanks and credit to Grace Speckman for her contributions and insights for the Sip Club.
Grace Speckman works hard to protect and maximize her clients wealth through tailored investments, financial planning, and strategic wealth management solutions. She is a Certified Financial Planner™ , awarded by the Certified Financial Planner Board of Standards, Inc., as well as a bachelor’s degree in psychology and economics from Butler University. grace.speckman@evansmay.com
Jeff Osorio is a Consulting CFO with over 30 years of experience in operationally oriented companies ranging from pre-Revenue to $4B with over 40 ERP implementations in his portfolio. He is also an Adjunct Professor in the MBA program of the Leavey School of Business at Santa Clara University. https://www.linkedin.com/in/jeff-osorio-1412181/