U.S. manufacturers are expressing alarm over the ongoing trade war initiated by Donald Trump, highlighting its negative impact on production and the economy as the dollar approaches a three-year low against the British pound. On Monday, the dollar fell to $1.3542 against sterling, following a disappointing ISM manufacturing survey indicating a third consecutive month of declining output. The ISM purchasing managers’ index dropped to 48.5%, signaling contraction as any figure below 50 indicates a reduction in manufacturing activity.
Participants in the ISM survey have voiced their concerns regarding ongoing tariff policies, with one paper producer stating, “Uncertainty due to the recent tariffs continues to weigh on profitability and service,” warning that unresolved trade negotiations with China could lead to empty retail shelves for many goods. A chemicals manufacturer also reported that suppliers are transferring the full burden of tariffs onto them, adding to the challenges faced by U.S. businesses amid rapidly changing trade policies.
The steep concerns intensified over the weekend when Trump announced a dramatic increase of tariffs on steel imports from 25% to 50%. He also accused China of violating the terms of a recently agreed-upon pause in the trade conflict. Last month, tariffs on Chinese exports were temporarily reduced from 145% to 30%, underscoring the volatility of the agreements between the two nations.
Compounding these challenges, a recent US court ruling questioned Trump’s authority to impose certain tariffs, with the White House currently contesting that decision. The deteriorating economic sentiment has also affected U.S. Treasury yields, as investors grow wary of the government’s capacity to sustain its debts amid significant tax cut proposals in Trump’s budget. Treasury Secretary Scott Bessent reassured the public on Sunday, asserting that the U.S. would “never default” and countering concerns from financial leaders like JP Morgan Chase CEO Jamie Dimon, who warned that the bond markets could be at risk.
While these developments have raised concerns regarding U.S. manufacturing and economic stability, there remains hope that diplomatic discussions could resolve trade tensions and lead to more predictable policies that benefit both manufacturers and the broader economy.