Texas manufacturing activity drops to 5-year low amid US tariff policies

According to a report by the Federal Reserve Bank of Dallas, a widely used gauge of manufacturing activity in Texas has plummeted to a 5-year low due to Donald Trump's tariff policies. Despite relatively robust output, local manufacturers are deeply concerned about global supply chain disruptions and uncertain business prospects.

Nearly 60% of respondents expect Trump's import tariffs to negatively affect their businesses this year. While most plan to pass these additional costs on to consumers, doing so without jeopardizing production is becoming increasingly difficult. This was highlighted by 38% of responding CEOs.

The purchasing power of Americans is under stronger pressure due to persistent price increases in the US. Over the past 4 years, inflation has risen by more than 20%. So, ordinary consumers are the first to be hit by the Trump administration's tariff policies, according to the experts polled by the Dallas Fed. They fear that negative effects of US import duties may eventually expand to local entrepreneurs.