Source: Trucking Dive
Date: 3rd December 2025

Persistent tariff volatility stalls investment, weakens orders and pushes manufacturers toward offshore production.

The U.S. manufacturing sector contracted at a faster pace in November as tariff-related uncertainty continued to weigh heavily on decision-making, according to the latest Purchasing Managers’ Index from the Institute for Supply Management. The index fell to 48.2%, marking another month below the 50% neutral threshold and underscoring how unresolved tariff policy is shaping investment behaviour, production plans and supply chain activity. The ISM’s Manufacturing Business Survey Committee noted that manufacturers are now ten months into an environment where tariff uncertainty is “freezing” long-term decisions.

Weakness in new orders, employment and supplier deliveries drove the latest decline. Backlog orders slipped to 44%, with only the food, beverage and tobacco category reporting expansion. Earlier improvements in late summer provided momentary momentum, but the gains have not held. In November, new orders contracted to 47.4% and employment dropped to 44%, reflecting a broader climate in which manufacturers are avoiding expansion and delaying workforce investments due to unclear trade conditions.

A major source of this uncertainty stems from the pending Supreme Court decision on the legality of broad tariff powers exercised under a national emergency declaration. With no ruling or expected timeline, manufacturers are left without clarity on future trade costs or regulatory stability. ISM’s data shows that 58% of manufacturing GDP was in contraction territory in November, illustrating the scale of the slowdown and its spread across major industrial sectors.

Survey commentary highlights a shift in behaviour, particularly in transportation equipment. One manufacturer reported adopting more permanent changes, including staff reductions, revised guidance to shareholders and the relocation of production offshore rather than expanding within the United States. Rising input costs, especially aluminium and steel, have intensified pressure on segments already strained by tariff volatility. According to ISM, this sector has been “battered” in recent months, despite slight near-term improvements.

S&P’s parallel PMI report painted a slightly more positive, but still cautionary, picture at 52.2%. Growth in output and domestic orders provided support, even as export demand softened due to ongoing tariff conditions. Manufacturers did express rising confidence following the end of the government shutdown, citing hopes for more stable policy direction, lower interest rates and greater political clarity. Nevertheless, uncertainty remains a significant drag on business planning, capital investment and overall sector confidence.

Shippers may see greater volatility in cargo flows as manufacturers adjust order patterns in response to tariff developments and shifting market expectations. Some sectors moving production offshore could reshape trade lanes and container demand, with long-term implications for routing, capacity planning and equipment repositioning. Lower manufacturing output may temporarily ease capacity pressures but could also drive rate softness across key corridors.

Importers face heightened unpredictability in landed costs as tariff decisions remain unresolved. Many manufacturers’ decisions to move operations abroad could result in higher import volumes of components or finished goods, altering supply chain structures. Extended uncertainty may encourage earlier ordering, more conservative stocking strategies and increased reliance on scenario-based planning to manage exposure.

Exporters may feel the impact of weakened U.S. production capacity and inconsistent global demand. As domestic manufacturers shift production offshore, export volumes of U.S.-made goods may decline, while export competitiveness could be influenced by softer freight rates. Exporters will need to remain agile as carriers adjust networks in response to fluctuating manufacturing activity and cargo demand.