Chief Executive Research
As President Donald Trump rolled out his global tariff regime, built, at least in part, to grow the U.S. manufacturing sector, the immediate result has been to unnerve manufacturing CEOs. Their confidence in future business conditions fell more than 30 percent between January and March according to Chief Executive’s latest CEO Confidence Index, which we fielded March 4 and 5.
Manufacturers’ forecast for business conditions 12 months from now dropped to 4.7 out of 10 from 6.8 out of 10 in January. That is lower than any point during the Covid-19 pandemic. CEOs in other industries are slightly more optimistic, forecasting future conditions at 5.1 out of 10.
Their rating of current business conditions also took a major tumble in our March poll, down 23 percent to 4.6 out of 10 on a scale where 1 is Poor and 10 is Excellent. CEOs in industries aside from manufacturing rate current conditions at a 5.1 out of 10, down almost 20 percent from January to the lowest level we’ve seen since the spring of 2020, when the pandemic shut down businesses around the world.
Why? “Chaotic and unpredictable application of tariffs that significantly inhibit investment,” John Payne, CEO of Kinematics, a renewable energy equipment manufacturer, says, echoing many of his peers in the March poll.
Asked to forecast effects on the economy in the coming six months, 58 percent of manufacturing CEOs expect a slowdown compared to only 45 percent of CEOs in industries other than manufacturing. None of the CEOs polled in manufacturing expect strong growth in the six months ahead.
Some manufacturing CEOs believe the strife will be short-lived. Half of the CEOs we polled expect conditions to improve over the course of the next 12 months, compared to only 35 percent of CEOs in other industries outside of manufacturing.
“I am expecting things to settle down after the current/near-term tariff issues,” says the CEO of a mid-market automotive and chemical manufacturer.
“The Administration is pro-business and bringing jobs back. Sure, there is uncertainty early on, but hopefully that will stabilize,” says the CEO of a mid-market capital equipment manufacturing firm.
Asked what they think about the Trump administration’s tariffs, 79 percent of manufacturing CEOs said they anticipate negative effects with one-third expecting short-term negative effects and 46 percent expecting lasting negative effects.
“Tariffs on Canada and Mexico with more to come will cause inflation and negatively impact the markets. Even the additional tariffs on China are unnecessary and will be harmful,” says the CEO of a small to medium light fixture design and manufacturing company.
When asked to rate how their level of optimism has changed across several areas since the Trump administration took office, 65 percent of manufacturers say the actions taken by the new administration have caused them to be less optimistic about the business prospects of their organization—while 69 percent say these actions will hurt U.S. companies’ ability to conduct business outside the U.S., and 75 percent believe this will hurt the taming of overall inflation and the costs of goods and services. “It is more and more difficult to predict the economic future because of the radical change in our political policies,” says the CEO of a food manufacturing business.
Only 54 percent of CEOs in industries other than manufacturing say the actions taken by the new administration have caused them to be less optimistic about the business prospects of their organization. Scroll through what CEOs said about the other issues, from immigration and AI competitiveness to healthcare and education:
When asked to share what this all means for their companies:
The proportion of manufacturing CEOs who forecast these figures to decline is higher than CEOs in other industries, signaling that the impact of these policies may cut certain industries more deeply than others.
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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