MNI INTERVIEW: Unreliable Trump Stings US Factories, ISM Says
Donald Trump's fickle trade policies have sparked a contraction in U.S. manufacturing and the slowdown is bound to accelerate, Institute for Supply Management chair Timothy Fiore told MNI Thursday.
"We could easily be headed here for a hard landing," he said. "Collapsing backlog. No inventory to pull forward."
The ISM manufacturing index's 0.3pp decrease to 48.7 in April understates weakness ahead, Fiore said. New export orders plunged 6.5ppts to 43.1, the lowest since 2009 outside of the pandemic, and employment is likely to weaken further.
"This is alarming, and there's no reason for it to reverse," Fiore said. "We're also seeing a step down in production because we don't know what the near- and medium-term future looks like and that's leading to additional losses in head count."
EMPTY SHELVES
This month's report was "overwhelmed" by comments about tariff policy and with very few comments about the state of demand, Fiore said. "We're just sitting here waiting. That's pretty much a universal statement," he said.
Besides trade policy, executives are waiting to see if Congress passes a fiscal reconciliation bill. Fiore said that is unlikely until well after Treasury Secretary Scott Bessent's July 4 goal. Even if Trump announces trade deals that won't staunch the bleeding in manufacturing.
"This is Trump's mantra. He wants to be unpredictable. He wants to be unreliable. That's a real problem for business, and you're seeing it manifest itself" in the ISM survey, Fiore said.
LESS COMPETITIVE
Big box retailers in the U.S. will likely see empty shelves later in the year, he said. Product "is not going to be there because they can't sell it at even 65% tariff levels."
