Chief Executive Research
Manufacturing CEOs polled by Chief Executive in April continue to say President Donald Trump’s tariff plans will have a negative impact on the U.S. economy, but their forecasts for the extent of the damage, their impact on individual businesses and how long they will last depend on their company’s level of international exposure—a growing divide in CEO optimism that could have political implications in the year to come.
An analysis of U.S. manufacturing CEOs from our most recent CEO Confidence Index survey, conducted April 8-10, finds their rating of current business conditions at 4.8 out of 10 in April, up from 4.6 in March. That follows a 23 percent drop in March.
Manufacturers’ outlook for the next 12 months also rose, to 5.2/10 from 4.7, following a 31 percent decline our polling found last month. In our broader poll, CEOs in non-manufacturing sectors showed declining confidence in April, rating current conditions at 4.4 and future conditions at 4.9, both down from their 5/10 ratings in March.
But lurking in the data is a clear division between CEOs at the helm of companies with domestically focused operations and those with more international exposure.
U.S-only manufacturers now rate current business conditions at 5.6/10 versus 4.2 in March. Their forecast for business conditions 12 months from now improved to 6.2/10 in April from 4.2 in March. In contrast, manufacturers with international operations saw dimming prospects, rating current conditions at 4.5/10 vs. 4.8 in March, with a 12-month outlook of 4.7/10 vs. 4.8 in March.
“We manufacture domestically and see opportunity to gain market share as companies adjust to changes,” said one manufacturing CEO, echoing peers.
For Gordon Rich, president of Reading Rock, a building materials supplier, economic indicators are also supporting this view. “There is underlying market strength and low unemployment rate,” he said.
That helps explain why 59 percent of domestic manufacturers in our survey said they support the tariffs as announced by the administration, compared to 25 percent of globally operating manufacturers. And a far-higher proportion of U.S.-only manufacturing CEOs believe the tariffs will have no effect or a positive effect on their business, 38 percent compared to 18 percent for global operators.
“We make a 100 percent U.S.-sourced/made product. Tariffs on cheap imported knockoffs will boost our sales,” said the CEO of a small consumer manufacturing company.
One thing manufacturers agree on: The U.S. economy will not see strong growth over the next six months. But a greater proportion of U.S.-only manufacturers expect the U.S. economy to grow (34 percent) compared to their internationally exposed peers (15 percent).
And just 34 percent of U.S.-only manufacturers now forecast a recession or slowdown in the U.S. within the next six months, vs. 72 percent of CEOs at manufacturing firms exposed to foreign markets—well above the 63 percent of CEOs in non-manufacturing sectors.
Most manufacturing CEOs polled believe their business will be impacted negatively by tariffs, but once again that proportion varies based on market exposure: 63 percent for U.S.-only manufacturers and 82 percent for global operators.
Overall, manufacturers also agree that the cost of goods sold (COGS) is rising, with only three U.S.-only manufacturers expecting COGS to decrease over the next 12 months—though by less than 5 percent, they say. No manufacturing CEO with international exposure said they expect COGS to decrease. This isn’t too far off from CEOs in industries other than manufacturing, where only 7 percent expect costs to decrease.
When discussing expectations for how business conditions will impact their respective company’s revenues over the next 12 months, the divergence between U.S.-only vs. global operators remains: 55 percent of U.S.-only manufacturing CEOs project increases in revenues compared to 46 percent of globally operating manufacturers. Instead, fully half of manufacturing CEOs with global operations expect revenue declines compared to 39 percent with U.S.-based operations.
When it comes to profits, the majority, regardless of where operations are based, expect a decline: 52 percent or U.S.-only manufacturers vs. 55 percent for those with international exposure. However, a higher proportion (42 percent) of U.S.-only operators expect profits to increase, vs. 30 percent of those with global operations.
The divide between domestic-only vs. international operations is particularly striking when it comes to headcount and capital expenditures.
Since 2002, Chief Executive Group has been polling hundreds of U.S. CEOs at organizations of all types and sizes, to compile our CEO Confidence Index data. The Index tracks confidence in current and future business environments, based on CEOs’ observations of various economic and business components. For additional information about the Index and prior months data, visit ChiefExecutive.net/category/CEO-Confidence-Index/
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