News & Insights

The outgoing Biden administration is undermining a U.S. manufacturer in its high-stakes dispute with the Mexican government by “seeking to erode investor-state dispute settlement (ISDS) protections under U.S. trade agreements with Colombia, Mexico and Canada,” a recent Wall Street Journal (subscription) editorial revealed.

The problem: ISDS protections safeguard U.S. investments from foreign governments seeking to interfere with or appropriate them, as the predicament of Vulcan Materials Company shows.

• Vulcan has been embroiled in a dispute with the Mexican government since 2018, when the government shut down some of its quarrying operations, according to Chairman and CEO J. Thomas Hill.
• The unwarranted shutdown forced the company to pursue arbitration under NAFTA, but the situation only got worse—former Mexican President Andrés Manuel López Obrador ordered all of Vulcan’s operations to cease in May 2022, including at a deepwater port the company built in the early 1990s.
• Now, the company is expecting its second round of arbitration to be decided by mid-2025—unless the Biden administration guts the investor protections in the U.S.–Mexico–Canada Agreement, handing a victory (and a key port) to the Mexican government.

Congressional fury: Both Congress and Vulcan itself learned of the administration’s efforts via The Wall Street Journal editorial, instead of directly from the Office of the U.S. Trade Representative. This is particularly egregious because the USTR is required to consult with Congress on investment obligations in trade deals.

• Bipartisan members of Congress have expressed their outrage, with Sen. Katie Britt (R-AL) writing in The Wall Street Journal (subscription) that “the Biden administration is negotiating away the due process of Americans, including my constituents, in the waning days of this lame-duck administration.”
• On Dec. 20, three bipartisan senators joined Sen. Bill Hagerty (R-TN) in condemning the USTR’s efforts on the Senate floor. “If Mexico is allowed to target, without repercussion, a company like Vulcan, one that employs thousands of Americans, and has operated responsibly in Mexico for decades, that means no American business is safe in Mexico,” Sen. Hagerty said.
• Sens. Tim Kaine (D-VA) and Tommy Tuberville (R-AL) joined both Sens. Britt and Hagerty in calling on Congress to pass the Defending American Property Abroad Act, which would impose penalties on Western Hemisphere countries that unlawfully seize the assets of American firms.

The NAM says: The NAM is calling on the USTR to halt this effort immediately, said NAM Vice President of International Policy Andrea Durkin.

• “ISDS has a legitimate role in U.S. trade policy to ensure our manufacturers receive fair and equitable treatment by foreign governments and to protect against egregious expropriation or nationalization of U.S. investments without adequate and effective compensation.”
• “U.S. manufacturers are entitled—at a minimum—to be consulted about any proposed changes that would impact their right to due process in ongoing cases.”

The Biden administration’s ban on new offshore oil and gas drilling in most American coastal waters “sets a bad precedent for the country,” the NAM said Monday.

What’s going on: The decision, which comes just two weeks before President Trump takes office, applies to “new drilling off the entire East Coast, as well as California, Oregon and Washington state” and “some drilling off Alaska’s coast in portions of the Northern Bering Sea and in the eastern Gulf of Mexico” (The Hill).

• Though there is currently no active drilling in the Atlantic and most U.S. offshore oil and gas production comes from the central and western Gulf of Mexico, the area placed under the ban is the largest ever “formally taken off the table for drilling by a president.”
• In response, President Trump on Monday said he would “unban it immediately” (Associated Press).

Why it’s a problem: The moratorium could prove harder for Trump to undo than other 11th-hour moves by Biden. That’s in large part because of the Outer Continental Shelf Lands Act, which gives U.S. presidents the right to block drilling in certain areas but not the right to reinstate it.

• However, Congress could work with the new president to undo the move—and it should, Timmons said. “Manufacturers are committed to working with Congress and [President Trump] to scale back this harmful decision that undermines American energy dominance.”

Several last-minute regulatory actions by the outgoing Biden Treasury Department are “clear example[s] of regulatory overreach” that should be withdrawn immediately, the NAM told the Biden administration recently.

What’s going on: The Treasury Department has proposed new guidance and regulations that, if finalized, would change the IRS’s treatment of related-party transactions, particularly as they relate to partnerships.

• The proposed standards would impose significant reporting obligations on manufacturers while also drastically changing the tax treatment of these commonplace payments.
• Additionally, Treasury has proposed new rules governing “dual consolidated losses” that would make it more difficult for manufacturers operating in multiple jurisdictions around the world to utilize their tax losses appropriately.

Why it’s problematic: The proposed standards are outside Treasury’s statutory authority and are “unlikely to withstand inevitable judicial scrutiny,” the NAM told the agency at the end of 2024.

• In December, the NAM laid out the legal issues endemic to Treasury’s proposals, identifying both substantive and process-related issues that undermine each action.
• The submission builds on manufacturers’ comments to the agency on the proposals themselves: The NAM said in July that the related-party guidance was “wholly unauthorized, unsupported and unsupportable” and in August told the agency that the related-party rules “would impose an undue burden on taxpayers that outweighs any potential compliance benefit.”
• It added in October that the dual consolidated loss proposal was “internally inconsistent” and “fail[ed] to reflect reasoned decision-making.”

Regulatory onslaught: The NAM has been at the forefront of pushing back on the Biden administration’s regulatory onslaught, which costs manufacturers upward of $350 billion every year.

• Shortly after the 2024 presidential election, the NAM led a group of more than 100 manufacturing associations in urging the incoming Trump administration to “address burdensome regulations that are stifling investment, making us less competitive in the world, limiting innovation and threatening the very jobs we are all working to create right here in America.”

What’s next: The NAM is calling on the Biden Treasury Department not to finalize these proposals in the administration’s final days, but rather to pause or withdraw the rules in question until the Trump administration takes office.
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Washington, D.C. – Following the publication of new final guidance by the U.S. Department of Treasury for the hydrogen production tax credit, National Association of Manufacturers President and CEO Jay Timmons released the following statement:

“America leads when we unleash all our energy potential, including hydrogen, American natural gas, nuclear and more. With a strong build-out of hydrogen production facilities, we will be able to add more sources of reliable energy for manufacturers, power plants and communities while cementing our energy dominance.

“The NAM has advocated consistently for flexibility in the credit using project-specific emissions data rather than national or regional averages. The Biden administration’s guidance provides manufacturers with an important step forward. But for hydrogen to truly become a game-changing energy source, we need to address restrictions that make it harder to cost-compete on a global scale. A robust and flexible hydrogen industry will also be a major boon to the production and utilization of American natural gas as well as American nuclear power.

“Under President Donald Trump’s leadership, we have an opportunity to cut taxes, slash red tape and unleash permitting reform—turning this credit into a powerful tool for American energy leadership and fuel security. It’s time to build on this momentum and ensure these incentives deliver on their full promise for America’s manufacturers, workers and economy.”

-NAM-

The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs nearly 13 million men and women, contributes $2.91 trillion to the U.S. economy annually and accounts for 53% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.

In October, the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index recorded a 3.6% annual gain, down from 3.9% in September. The 10-City Composite saw an annual increase of 4.8% in October, a decrease from 5.2% in September, while the 20-City Composite rose 4.2% year-over-year, down from 4.6%. Among the 20 cities, New York again posted the highest annual gain at 7.3%, followed by Chicago at 6.2% and Las Vegas at 5.9%. Tampa exhibited the lowest annual increase at 0.4%.

On a month-over-month basis, the U.S. National Index dropped 0.2% before seasonal adjustment but increased 0.3% after adjustment. The 20-City and 10-City Composites saw 0.2% and 0.1% decreases pre-adjustment, while both rose 0.3% post-adjustment.

The National Index is at a 17th consecutive all-time high, and only Tampa and Cleveland fell during the past month. Moreover, the National Index continued to improve following the election, indicating that less political uncertainty has led to an equity market rally.

In December, U.S. manufacturing remained in contraction, with output decreasing at the fastest pace in 18 months. The S&P Global U.S. Manufacturing PMI fell to 49.4 in December from 49.7 in November, slightly below the 50 threshold that indicates a contraction in the sector. This suggests manufacturing conditions deteriorated to a greater extent than the previous month but still only at a modest rate overall.

After nearly stabilizing in November, the rate of decline in new orders increased sharply in December, with customers reluctant to commit to new projects. Production levels falling for a fifth consecutive month at an increased rate generally reflected the drop in new orders. New export orders also declined and to a greater extent than overall new business, as Europe and Australia reported weaker demand.

In addition, business confidence pared back some in December after jumping in November. Nonetheless, employment continued to rise modestly as firms anticipate the incoming administration will improve demand conditions, providing a boost to business in 2025.

Although respondents felt more optimistic due to the election result, firms expressed increased worries about inflation as input costs increased sharply. As a result, manufacturers were prompted to increase their output prices again. Meanwhile, suppliers’ delivery times lengthened to the greatest extent since October 2022, linked to staff shortages at suppliers and freight delays.

In December, the global manufacturing sector fell back into contraction to 49.6 after activity had stabilized in November. Four of the five PMI components were at levels consistent with deterioration, as output and new orders registered declines after meager growth the month prior, and supplier delivery times lengthened. Manufacturing output declined modestly in December, and with marginal gains in October and November, production stagnated in Q4.

The shift from stabilization back to contraction is reflective of downturns in the U.S. and U.K., hitting 18- and 11-month records, respectively. On the other hand, Greece and Spain posted solid performances, contrasting the deep downturn in the rest of the Eurozone, France and Germany in particular. The fastest growth occurred in India and the Philippines compared to other surveyed countries.

Data broken down by sector exhibited lower output in the intermediate and investment goods industries. However, the consumer goods sector rose for the 17th consecutive month. In the same vein, new orders also increased for intermediate and investment goods, which was only partly offset by growth in new orders for consumer goods.

In December, manufacturing employment declined for the fifth consecutive month but at a slightly slower rate than the prior month. Job cuts were reported in the Eurozone and China, while the U.S. and Japan registered employment growth. Input inflationary pressures picked up to a four-month high, while output cost inflation eased to a nine-month low. As a result, confidence remained subdued, with optimism dropping to a three-month low.

In December, Texas factory activity increased, but industry indicators were mixed. The production index rose from -0.9 to 3.9 but was still far below the last positive reading of 14.6 in October. The new orders index increased from -11.9 to -0.9, indicating demand was relatively unchanged from November. Meanwhile, the capacity utilization and shipments indexes both rose slightly but remained in negative territory at -2.5 and -2.0, respectively.

Perceptions of manufacturing business conditions improved in December, with the general business activity index rising six points to 3.4, the first positive reading since April 2022. Meanwhile, the company outlook index continued to grow for the second consecutive month, improving to 8.0. The outlook uncertainty index, which has been volatile lately, fell for the second month in a row, from 5.9 to 1.2.

Labor market indicators suggested employment and workweeks steadied in December. The employment index fell 4.6 points to 0.3, while the hours worked index also decreased from 0.3 to -0.9. More than 16% of firms reported hiring, while nearly the same percentage noted layoffs. Moderate upward pressure on prices and wages seen in the past few months eased. The wages and benefits index fell slightly from 18.6 to 17.7. Meanwhile, the raw materials prices index dropped 18 points to 10.5, the lowest reading in 17 months. The finished goods prices index fell into the negative for the first time since 2023, decreasing more than 12 points to -3.4.

The outlook for future manufacturing activity remained optimistic, but the future production index fell from 44.0 to 32.7, with 44% of firms expecting increases in output in the next six months. Similarly, the future general business activity index remained positive but fell from 31.2 to 20.6.

In December, the U.S. manufacturing sector contracted for the ninth consecutive month, with the ISM Manufacturing^® PMI rising to 49.3% from 48.4% the prior month, indicating activity contracted at a slower pace. The New Orders Index continued in expansion territory, strengthening to 52.5%. In addition, production returned to expansion after six months of contraction, registering 50.3%. Meanwhile, inventories (48.4%), employment (45.3%) and backlog of orders (45.9%) remained in contraction. The Inventories Index, although still low, ticked up from its November reading of 48.1, suggesting a desire by companies being more willing to advance order deliveries to avoid potential tariffs.

The New Orders Index increased for the second consecutive month and rose 2.1 percentage points from November. While the index hasn’t shown consistent growth since a 24-month streak of expansion ended in May 2022, respondents noted an improvement in demand, with two major sectors—computer and electronic products and food, beverage and tobacco products—reporting an increase in new orders.

The Production Index rose 3.5 percentage points in December to expansion after contracting in November. Despite expanding overall, only one of the six largest manufacturing sectors (computer and electronic products) reported increased production. Meanwhile, an expansion of new orders coupled with relatively stable production levels slowed the rate of declining backlog levels.

The Employment Index dropped 2.8 percentage points in December, contracting for the seventh consecutive month and at a faster pace. Of the six largest manufacturing sectors, none reported increased employment. Furthermore, companies continued to reduce headcounts through layoffs, attrition and hiring freezes.

The Prices Index rose 2.2 percentage points to 52.5%, indicating raw materials prices increased for the third straight month in December. Aluminum, basic chemicals, copper and natural gas registered increases, offset partly by steel, plastic resins and diesel fuel falling in price. Slightly more than 14% of companies reported paying higher prices, up barely from the percentage reported in November but down from nearly 20% in October.

Washington, D.C. – National Association of Manufacturers President and CEO Jay Timmons released the following statement on the passing of President Jimmy Carter:

“In his long and remarkable life, President Carter set an example of service, decency and honor. Regardless of whether one supported him politically or not, all can agree that he showed his fellow Americans what it means to lead with heart and conviction, to put one’s faith into action and to demonstrate humility and dignity no matter one’s rank or position. Indeed, from his early days in the Navy to his later years teaching Sunday school, President Carter always strove to serve a cause larger than himself.

“He came into office when America was still reeling from political scandal and a divisive war, and he was forced to contend with nationwide economic hardship and successive geopolitical crises. Despite the circumstances, it cannot be denied that he demonstrated an unshakeable commitment to the values that positively shape our civil society.

“Those values would guide his efforts in the following four decades, during which, in many ways, he defined the modern post-presidency. The former commander in chief was just as comfortable picking up a hammer to build homes for those in need as he was flying overseas to lead diplomatic missions. Through the Carter Center, the farmer from Plains, Georgia, became one of the world’s best-known human rights advocates and staunchest defenders of democracy. Manufacturers certainly share his belief that democracy is what makes our way of life possible.

“As the nation mourns the loss of our longest-living former president and honors all that he and Rosalynn, his beloved wife of 77 years, meant to our country, our prayers and condolences go out to the Carter family.”

-NAM-

The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs nearly 13 million men and women, contributes $2.91 trillion to the U.S. economy annually and accounts for 53% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.