US manufacturers report increasing concerns amid trade uncertainties and rising costs
Image courtesy of NMMA.
The National Association of Manufacturers (NAM) Q1 2025 Manufacturers’ Outlook Survey reports increasing concerns among US manufacturers, particularly in the recreational marine sector.
NAM is a trade association representing US manufacturers across various industries, including boatbuilding.
76.2 per cent of respondents to the survey cited trade uncertainties as the primary challenge. This marks a 20-percentage-point increase from Q4 2024 and a 40-point rise from Q3 last year. Additionally, 62.3 per cent of respondents identify rising raw material costs as a factor affecting profitability.
The survey, conducted between 11 and 28 February 2025, indicates a cautious industry outlook. While 69.7 per cent of manufacturers express optimism about their company’s prospects, this is a decline from 70.9 per cent in Q4 2024, seemingly reflecting broader economic concerns. Potential changes to the Tax Cuts and Jobs Act are also influencing investment decisions.
The Tax Cuts and Jobs Act (TCJA), enacted in 2017, introduced tax reductions for individuals and businesses, many of which are set to expire in 2025. If not extended, higher taxes and fewer business incentives could lead marine manufacturers to delay equipment purchases, slow expansion and reduce hiring. Constraints on R&D funding may also hinder innovation in propulsion, sustainability and marine technology, ultimately affecting the industry’s competitiveness.
If the act is not extended, manufacturers surveyed by NAM anticipate the following impacts:
- 69.35 per cent of manufacturers anticipate delaying capital equipment purchases, which would affect shipbuilding and production improvements.
- 45.23 per cent envision postponing hiring, limiting workforce expansion.
- 44.72 per cent predict a slowing of operational growth, putting facility expansions and upgrades on hold.
- 41.71 per cent anticipate reducing R&D investments, which could impact advancements in propulsion, sustainability and technology.
- 40.20 per cent predict constraining wage and benefits increases, potentially affecting workforce retention.
Manufacturers expect product prices to rise by 3.6 per cent over the next 12 months, the highest rate since Q3 2022. Raw material costs are projected to increase by 5.5 per cent, the steepest rise since mid-2022, contributing to ongoing supply chain pressures.
Export sales forecasts remain low, with a projected increase of just 0.1 per cent. This is the weakest outlook since Q2 2020, when global trade was severely impacted by the pandemic.
Earlier this month, the National Marine Manufacturers Association (NMMA), a trade association representing boat, marine engine and accessory manufacturers in North America, released its latest Recreational Boating Industry Data Summary report, highlighting a significant 9.1 per cent decline in new boat sales in North America in 2024.
The White House has announced a series of trade actions under President Trump’s America First Trade Policy that are likely to affect the US boating industry. These actions include reinstating Section 232 tariffs on steel and aluminium imports at 25 per cent each, effective from 12 March, and implementing a 25 per cent tariff on imports from Canada and Mexico, which came into force in the US on 4 March 2025.
In response to US steel and aluminium tariffs, the European Union has confirmed plans to impose its own duties on €26bn ($28.3bn) worth of American goods — including boats. This is seen as a significant escalation of the trade war between two traditional global allies.
Following President Trump’s Joint Address in early March, Frank Hugelmeyer, CEO of NMMA, stated: “President Trump is right to focus on strengthening American manufacturing, and we appreciate the administration’s commitment to fair trade. However, it’s essential that tariff and trade policies are structured in a way that support US industries rather than creating unintended challenges. The recreational boating industry is a prime example of American success, but global competitiveness depends on policies that enhance — not hinder — growth.”
