Trump’s Tariff Strategy Backfires as U.S. Manufacturing Contracts for Third Consecutive Mont

Hadisur Rahman, JadeTimes Staff   

H. Rahman is a Jadetimes news reporter covering the USA

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Image Source: Jim Sergent

In a striking contradiction to one of President Donald Trump’s core economic promises, the U.S. manufacturing sector is experiencing a deepening contraction an outcome many attribute directly to his aggressive tariff policies.

According to the Institute for Supply Management (ISM), manufacturing activity continued to shrink in May, marking the third consecutive month of decline. The ISM’s closely watched Purchasing Managers Index (PMI) fell to 48.5%, a drop of 0.2 percentage points from April’s 48.7%. Any reading below 50% signals contraction in the manufacturing sector.

“57% of the manufacturing sector’s GDP contracted in May," said Susan Spence, chair of the ISM’s Manufacturing Business Survey Committee, during a press briefing Monday. “That’s up from 41% in April. The contraction is deepening.”

The ongoing decline has coincided with the Trump administration’s ongoing efforts to finalize tariff rates across numerous countries and product categories. As the administration pushes ahead with its trade agenda, uncertainty has become a key concern for manufacturers.

“The headwinds from tariff increases are starting to show up in economic data,” said Bill Adams, chief economist at Comerica. “The ISM Manufacturing PMI reports that tariffs are a drag on business, as is the uncertainty about where tariffs will settle over the longer term.”

Each anonymous respondent in ISM’s May survey cited tariffs as a dominant concern. While some manufacturers welcomed the partial easing of tariffs between the U.S. and China, many noted that the short-term relief was overshadowed by ongoing uncertainty.

“Tariff whiplash continues,” one manufacturing manager commented. “While the easing of tariff rates between the U.S. and China in May was welcome news, the question is what happens in 90 days. We are doing extensive work to make contingency plans, which is hugely distracting from strategic work.”

As of Monday, Reuters reported that the Trump administration has issued a June 4 deadline for countries to submit their “best and final” tariff offers. This would allow a five-week window before the administration’s self-imposed July 8 decision point, following a 90-day pause announced in April.

Despite the manufacturing downturn, the broader U.S. economy remains on a growth trajectory. ISM noted that as long as the manufacturing index remains above 42.3%, the overall economy is still expanding.

“Goods-producing sectors of the economy will likely contract in 2025,” Adams noted. “However, service-providing industries, which account for most economic activity and employment, are likely to keep growing and help the economy avoid a recession.”

Still, concerns remain that continued uncertainty and stagnation in manufacturing could ripple through the broader economy if unresolved. “Production is frozen,” Spence added. “Growth can’t resume until we get clarity on tariff policy.”