Small manufacturers in the U.S. are taking a cautious approach to the market as they pull back on hiring and investments in response to trade tariffs imposed by President Donald Trump, reports in Reuters said on Friday (May 4).
Manufacturing executives interviewed by the publication said hiring and investment plans have stalled as a result of trade policies that imposed import tariffs. One steel manufacturer interviewed by Reuters, Gradall Industries, delayed hiring plans as a result of an increase on steel imports, which account for 35 percent of the cost of the company’s production.
President Trump introduced steel and aluminum import taxes earlier this year in an effort to protect and promote domestic production. But manufacturing companies told reporters those import taxes have driven up the costs of their raw materials and rendered them less competitive against foreign rivals.
A survey released last week by the Institute for Supply Management cited by Reuters found widespread hiring stalls in the U.S. manufacturing space in April.
Another manufacturer, The Metalworking Group, halted $500,000 investment plans to bring in new equipment and staff, Reuters said.
“It’s going to be 2019 before we buy anthing because we don’t have enough confidence to do it,” the company’s President, Mike Schmitt, told reporters. “There’s just too much uncertainty out there right now.”
The White House also proposed a 25 percent import tariff on 1,300 products from China in an effort to strong-arm the country into revising policy on intellectual property, reports noted. This tariff, too, could place added cost pressures on U.S. manufacturers that rely on those imports.
Reports said manufacturers’ challenges were linked to national trade policy, despite expectations that tax reform would encourage businesses to increase hiring and investment.
The manufacturing sector’s struggles are not isolated. Last Friday, CBIZ published its Small Business Employment Index and found hiring across small businesses — firms with 300 or fewer employees — slowed, with growth dropping by 0.21 percent in April. That compares to a 1.39 percent increase in hiring in March.
“Small businesses may be hitting the pause button ahead of seasonal spring hiring,” said CBIZ Employee Benefits Executive Vice President Philip Noftsinger in a statement. He added that April is traditionally a strong month for small business hiring in the U.S.
ADP and Moody’s Analysts released hiring data that found job growth across companies of all sizes beat expectations in April.