The pressure on supply chains caused by trade uncertainties and increased raw material costs is being felt by manufacturers across the board. The National Association of Manufacturers (NAM) Q1 2025 Manufacturers’ Outlook Survey reveals—not surprisingly—growing concerns over both. “Trade uncertainties surged to the top of manufacturers’ challenges, cited by 76.2% of respondents, jumping 20 percentage points from Q4 2024 and 40 percentage points from Q3 of last year,” NAM reports.

Increased raw material costs came in second, cited by 62.3% of respondents. In the Q1 survey, 69.7% of survey participants said they felt positively about their company’s outlook, down slightly from 70.9% in Q4 2024.

Jamie Hennigan, Managing Vice President of Communications and Public Affairs at NAM, emphasizes that Congress needs to act quickly on extending the Tax Cuts and Jobs Act. If not, he warns, “69.35% of survey respondents said they would delay purchasing capital equipment, while 45.23% would hold off on hiring, 44.72% would stall expansion of operations, 41.71% would limit R&D investments, and 40.20% would curb increases in employee wages or benefits.”

Price pressure is only going to grow worse, respondents predicted. Indeed, manufacturers expect prices on their product lines to increase an average of 3.6% over the next 12 months, up from 2.3% in Q4 and the highest level since Q3 2022, when inflation was still more than 8%, the survey noted.

“Manufacturers expect raw material prices and other input costs to rise 5.5% over the next year,” the findings show. “This marks the highest anticipated rate of increase since Q2 2022, when inflation hovered between 8% and 9%.”

Manufacturers also expect export sales to increase by just 0.1% over the next 12 months, the lowest level since Q2 2020—the height of the Covid-19 pandemic—highlighting the challenges in global trade and demand.

Supply Chain Risk Mitigation

Ever since the Covid-19 pandemic and subsequent global shutdowns that caused grievous supply chain disruptions, the topic of risk mitigation has been top-of-mind for many American manufacturers, says Michelle Comerford, Project Director/Industrial & Supply Chain Practice Leader for Princeton, NJ-based Biggins Lacy Shapiro & Co., LLC (BLS), one of the largest specialty site selection and incentives advisory consulting firms in North America.

“This led many companies to begin to address global manufacturing footprints as well as sourcing strategies to help combat these concerns over the past few years,” Comerford adds. “Some companies made major changes to address risk mitigation in the last few years, including diversifying supply chain outside of China, and are thus in a better position today to deal with the new tariff issues.”

At present, supply chain risk mitigation continues to be a top-of-mind concern, coupled with—and in some cases compounded by—tariff concerns.

The companies that began sourcing diversification strategies realignment over the last couple of years as a result of Covid disruptions “are likely in a better position now to deal with the tariff threats/enactments due to having some alternative sourcing options identified,” Comerford asserts. “Many of those who didn’t heed the earlier supply chain disruption warning signs are now wishing they did.”

To continue to combat both rising operating costs and reported truck driver shortages, Comerford says many companies are considering using rail for transport of some products, particularly for long-haul shipments.

BLS continues to work with a number of manufacturers who plan to invest in plants here to establish domestic capacity.

“Most of these companies have an established U.S. customer base they were serving via imports from global operations,” Comerford explains. “The business case for U.S. production investment—already established based on the benefits of being closer to customers, reduced shipping costs and risk, the ability to respond faster to changing customer preferences, and the real or perceived threat of tariffs on imports—only helps strengthen this argument for many companies.”

Advances in technology over the past few years that have helped improve production processes and reduce the need for low-cost manual labor “have also helped make a U.S. manufacturing operation a more competitive and viable option for many companies,” she adds.