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Editor’s note: This story is part of a series highlighting takeaways from a July 23 event hosted by Supply Chain Dive, Manufacturing Dive, Trucking Dive and Packaging Dive. Register here to watch the replay on demand.
An uncertain trade policy environment is a top challenge for the supply chain, as it impacts productivity output and the job market, critical indicators of the economy’s direction, panelists said at Supply Chain Dive’s July 23 event, “Supply Chain Outlook: Trends and Risks to Watch in 2025.”
“After strong early gains this year, the engine’s clearly losing steam,” Victoria Bloom, chief economist at the National Association of Manufacturersk, said.
Manufacturing accounted for approximately 10% of the United States’ gross domestic product during the third quarter of 2024, adding $2.93 trillion to the economy, according to the National Institute of Standards and Technology’s March 4 blog post. For every dollar spent on the industry, it generates $2.69 in total economic activity, making it “one of the largest impacts of any sector.”
While production output went up 0.1% in June, it’s still not a full recovery from April’s drop of 0.5%, Bloom said.
New orders jumped in May to 8.2%, primarily from the aerospace sector. “But once you strip out aerospace, growth was nearly flat, and the broader manufacturing base just isn’t seeing the same lift,” Bloom said.
Reduced manufacturing activity has also dampened hiring, Bloom added. The manufacturing sector lost 15,000 jobs in May and June combined, the Bureau of Labor Statistics reported.
Job opening levels plummeted 28% YoY to 414,000 in May — 162,000 less than the year prior, according to a Bureau of Labor Statistics news release dated July 1.
“All of this is happening under the backdrop of heightened trade uncertainty,” Bloom said.
Inventory levels dipped in April and increased marginally in May, ending less than one percentage point higher year over year.
“There’s been some unique cases, such as rare earth magnets, where there’s been front loading of those purchases,” Bloom said. “But … since this 10% baseline tariffs abroad, many of the manufacturers I’ve spoken with have been in more of a wait-and-see approach, rather than frontloading those purchases.”
The rate pressure has also impacted other specific markets such as ocean and trucking, leading to contingency and altering plans and building buffers that increase supply chain costs. Moreover, if the tariffs go into effect next month, those costs could rise further, Bloom said. She added that manufacturers have been working through existing stocks to delay some of the costs from trickling down, which Bloom anticipates will continue in the coming months.
“That uncertainty is like kryptonite for supply chains,” said Jess Dankert, VP for supply chain at the Retail Industry Leaders Association. “It makes it hard for supply chains to function at optimal efficiency, and oftentimes, less efficiency equals more cost.”
In the meantime, Bloom and Dankert advised companies to closely monitor the tariff deadlines and utilize resources from their trade group associations to stay informed about the latest developments. Additionally, companies should continue to demonstrate resilience and form contingency plans.
“Companies who are going to come out better on the other end amid all this increased uncertainty just won’t be riding out the storm, they’ll be navigating it,” Bloom said.
