Increasingly, U.S. companies appear to be placing their bets that the White House’s plan to bring overseas manufacturing back to America won’t turn out to be so harsh in the long run.
A forthcoming report from PYMNTS Intelligence shows that in mid-May, just 5.9% of U.S. firms with at least $1 billion in annual revenues replaced their foreign suppliers with domestic ones. That’s after 9.1% reported having done so in April. Among companies that haven’t taken that step, fewer than three in 10 said in May that they might do so, down from 36.7% the month before.
The actions come despite nearly all CFOs surveyed seeing a potential for tariffs to create opportunities for supporting local economies in the U.S. The apparent disconnect may signal that concrete actions today say more than abstract scenarios that run counter to the U.S.’ status as a net exporter of goods to the world.
The data is based on a PYMNTS Intelligence survey of 60 verified chief financial officers (CFOs) at enterprise-level companies spanning a wide range of industries, including retail trade, industrial and manufacturing, finance and insurance, and technology, that was conducted May 6–16.
The responses so far don’t mean that corporate America is fully calling what they might appear to see as the administration’s bluff. Instead, they’re scrambling to achieve operational efficiencies in the here and now as they simultaneously game out potential longer-term impacts on their businesses. Put otherwise, you can be optimistic about long-term actions on tariffs and still be rattled by uncertainty that requires action now.
Those administration actions have been inconsistent at best. On April 2 (“Liberation Day”), Trump raised levies on imports of goods and materials from China to 54%. Six days later, he jacked them up to 104%. Twenty-four hours later, 145%. By May, they’re down to 115% and a 90-day pause. On Monday (June 9), the United States and China began trade talks in London centered on easing U.S. tariffs on the super power in exchange for the world’s second-largest economy loosening its curbs on rare-earth metals vital to cars and consumer electronics.
Inconsistency aside, the American economy is already seeing the impact of tariffs. U.S. imports in April plunged 16.3% to $351 billion compared to $419.4 billion in March, data from the Bureau of Economic Analysis and the Census Bureau shows.
According to the forthcoming report, a significant 92% of goods and retail CFOs surveyed in May reported greater uncertainty and planning challenges due to tariffs, up from 86% in April.
What’s different month-to-month is how companies are refining their responses. More than seven in 10 surveyed enterprises said in May that they might reduce their operational costs, including for payroll and hiring, up sharply from nearly 47% in April. Also, more than half of enterprises are preparing to raise prices to offset these costs, and 28% have already done so. Meanwhile, 96% of goods and retail firms expect product shortages this year, more than 10 percentage points higher than in April.
The here-and-now can span different time frames. Just over six in 10 say it could take as long as three years — basically the remainder of Trump’s second term — to shore up their supply chain resilience. As many goods and retail enterprises expect enhancement of their supply chains to withstand tariff-fueled disruptions to take between one and three years to be realized, while nearly four in 10 say they can sort things out in three to twelve months.
All respondents expect to eventually face higher costs for raw materials, with just over three in four (77%) anticipating that within the next year, and 75% foresee shortages or delays in obtaining certain products. Nearly four in 10 expect potential layoffs or curbed hiring. All those near-term actions co-exist with the view that overseas manufacturing isn’t coming back to American shores.
Read more:
Tariffs Force 81% of Middle-Market CFOs to Abandon Long-Term Investments for Short-Term Tactics
White House Tariffs Quashed by US Trade Court
Tariff Turbulence Drives Operational Overhaul of US Mid-Sized Firms
