News & Insights

In his first few hours in office, President Trump outlined the broad contours of his “America First Trade Policy.” Among the primary objectives: to “reduce dependence on foreign nations for critical supply chains,” “promote investment and productivity” and “enhance our [n]ation’s industrial and technological advantages.”

Key takeaways: The president did not announce new tariffs. His executive order instructs key agencies to begin looking at underlying concerns about unfair or unbalanced trade, specific concerns regarding trade with China and matters related to economic security. The findings could form the basis for the administration’s choice of remedy, potentially leading to more tariffs and other policy measures.

• President Trump “is wasting no time in taking action to strengthen America’s hand on trade, and manufacturers appreciate his focus on combatting unfair practices that hurt American workers,” NAM President and CEO Jay Timmons wrote on Tuesday. 

What comes next:  Three comprehensive reports are due by agencies to the President by April 1. Issues to be investigated include:

• Persistent trade deficits;
• Unfair trade practices;
• Currency manipulation;
• Importation of counterfeit products and contraband;
• China’s compliance with the “Phase One” deal; and
• Review of the U.S. export control system.

Tariffs on Canada, Mexico and China: The EO tasks the Commerce Department with assessing unlawful migration and fentanyl flows from Canada, Mexico and China. The findings are also due April 1.

• Prior to that date, President Trump could issue a separate EO using international emergency powers. This would enable him to impose tariffs sooner.

Building on past success: The president cited the China Phase One deal, the United States–Mexico–Canada Agreement and Section 232 tariffs as successful elements of his first-term agenda.

Expect USMCA review to kick into gear: The EO also instructs the United States Trade Representative to begin its public consultation processes in preparation for the six-year review of the USMCA and to assess the impacts of U.S. participation in the agreement.

The NAM’s view: Speaking to CTV from the Canadian Embassy on Inauguration Day, NAM President and CEO Jay Timmons said:

• “We are in a global economy, and we want to be able to produce as much as we can. We need the entire continent of North America to be able to do exactly that.”
• “The United States, Canada and Mexico—because of the USMCA that was negotiated and implemented a few years ago—has the opportunity to take on together some actions to thwart problematic, market-distorting practices that are coming out of other countries, specifically China.”

Related news: In another EO, the president pulled the U.S. out of the Organization for Economic Co-operation and Development global tax deal on the grounds that the agreement “allows extraterritorial jurisdiction over American income but also limits our nation’s ability to enact tax policies that serve the interests of American businesses and workers.”

President Trump has frequently emphasized his intention to remove burdensome regulations that weigh on manufacturers and other businesses. In his first day on the job, he took steps to set this rollback in motion. Here’s what manufacturers need to know.

Regulatory freeze: As most presidents do when they take office, President Trump imposed a freeze on new and in-process regulations.

• The freeze pauses any rules from the outgoing Biden administration that have been proposed but not finalized, finalized but not sent to the Federal Register or sent to the Federal Register but not published.
• The executive order also recommends that agencies delay the effective dates of any published-but-not-yet-effective Biden rules by at least 60 days, giving the administration time to decide whether to rescind or revise the rules.

Reinstating policies: President Trump also rescinded several of President Biden’s executive orders, reinstating policies that had been in place during Trump’s first term.

• Most prominently, President Trump undid President Biden’s rescission of his “one-in-two-out” policy, setting the stage for more reworked and repealed regulations than new rules in his second term.
• He also rescinded a Biden order that had reduced agencies’ obligations to seek public input on guidance documents, which agencies use to interpret regulations and give direction to regulated parties.

Establishing DOGE: President Trump also established the Department of Government Efficiency, which will “be dedicated to advancing the president’s 18-month DOGE agenda,” including modernizing technology and software, increasing efficiency and reducing the size of government.

• DOGE will play a role in implementing the president’s new hiring freeze: the new organization will have 90 days to work with the Office of Management and Budget and the Office of Personnel Management on a plan to reduce the size of the federal government’s workforce while the hiring freeze is ongoing.

The NAM says: “The regulatory burden facing manufacturers is sapping growth, costing the U.S. economy more than $3 trillion annually, with manufacturers shouldering $350 billion in annual regulatory costs. Small manufacturers—the backbone of our supply chain—are especially hard hit, with costs exceeding $50,000 per employee per year, or about $1 million for a 20-person shop,” said NAM Managing Vice President of Policy Chris Netram.

• “The NAM has already provided the new administration with more than three dozen regulatory actions to ease the regulatory burden on our industry.”
• “The NAM looks forward to working with the Administration to right-size the regulatory burden, providing smart, tailored rules that ensure the United States remains the best place in the world to build and create, fueling economic growth and strengthening our global competitiveness.”

President Trump’s flurry of executive orders also included major changes to immigration policy.

National emergency: President Trump declared a national emergency at the southern border, aiming to bolster border security and deter illegal entry into the country. Specific actions include:

• Building physical barriers, both temporary and permanent;
• Directing the Department of Homeland Security to deter illegal immigration and detain illegal immigrants until they can be removed swiftly from the country;
• Reinstating the “Remain in Mexico” policy; and
• Terminating the CBP One app, which is used to schedule border appointments and facilitate entry into the U.S.

Forceful intervention: Another EO directs the military to protect the sovereignty, territorial integrity and security of the U.S. and its borders.

• President Trump also defined the situation at the southern border as an “invasion,” effectively suspending the ability of individuals to apply for asylum.

Other actions: President Trump reinstated his 2017 border security EO that withholds federal funds from sanctuary cities while encouraging collaboration between federal and state agencies, steps up deportations and directs U.S. Immigration and Customs Enforcement to hire 10,000 immigration officers. He also restored a 2017 EO providing for “enhanced vetting” of refugees.

• President Trump also issued an EO on birthright citizenship, setting up legal challenges over his administration’s interpretation of the 14th Amendment.

The NAM says: “President Trump is right to make the border a first priority,” said NAM Managing Vice President of Policy Chris Netram. “Control of our borders is a national security imperative that provides certainty about the individuals in our country and ensures the rule of law is upheld.”

• “Even as we secure our borders, we must ensure that America remains a beacon of opportunity and innovation. Manufacturers welcome the opportunity to work with the Trump administration and Congress to fix our broken immigration system. America deserves a modern, well-functioning system for welcoming new people to the United States that helps drive our economy forward, meets our nation’s workforce needs and ensures that the United States remains the most innovative and prosperous country on the planet.”

Among President Trump’s Day One executive orders were several manufacturing-crucial energy policies. We break them down here.
 
Domestic energy resources: The president focused on unlocking the vast wealth of energy resources in the United States with the “Unleashing American Energy” executive order, which:

• Orders a 30-day review by all federal departments and agencies of regulations and other barriers to the identification and development of domestic energy resources (particularly oil, coal, natural gas, biofuels, critical minerals, nuclear and hydropower);
• Directs the Department of Energy to resume liquefied natural gas export permits, ending the previous administration’s moratorium, and resumes review of LNG export applications;
• Rescinds the “NEPA Phase 2” rulemaking, the Council on Environmental Quality’s revisions to the National Environmental Policy Act;
• Directs the reconsideration of the legality of regulating greenhouse gas emissions under the Clean Air Act;
• Revokes an executive order by President Carter that gives the CEQ authority to issue binding regulations to other agencies;
• Terminates state emissions waivers that limit the sale of gas-powered vehicles and begins the process of unwinding a suite of vehicle tailpipe regulations from the previous administration;
• Directs all agencies to provide the opportunity for public comment and rigorous, peer-reviewed scientific analysis for regulations; and
• Disbands the Interagency Working Group on the Social Cost of Greenhouse Gases.  

A “National Energy Emergency”: The president’s declaration of a “national energy emergency”:

• Authorizes the heads of every federal agency and department to use emergency powers to facilitate domestic energy development and production;
• Requires the Environmental Protection Agency and DOE to consider issuing emergency fuel waivers to allow for year-round sale of E15 fuel with a blend of 15% ethanol;
• Requires a report from the Army Corps of Engineers and other agencies on potential and planned permitting provisions to speed up energy infrastructure permitting under various legislative measures; and
• Requires agencies to use emergency authority under the Endangered Species Act to expedite energy project permitting consultations.   

Alaskan energy: The president’s “ Unleashing Alaska’s Extraordinary Resource Potential” order provides for the opening of Alaskan lands to energy exploration and development and promotes Alaskan LNG production.
 
The Paris Agreement: “Putting America First in International Environmental Agreements” withdraws the U.S. from the Paris Agreement, a 2015 climate change accord.
 
Rescissions: “Initial Rescissions of Harmful Executive Orders and Actions” includes revisions of multiple executive orders put in place by the previous administration, including “Tackling the Climate Crisis at Home and Abroad,” “Establishment of the Climate Change Support Office,” “Climate-Related Financial Risk” and “Strengthening American Leadership in Clean Cars and Trucks.”  
 
Offshore wind: The “Temporary Withdrawal of All Areas on the Outer Continental Shelf from Offshore Wind Leasing and Review of the Federal Government’s Leasing and Permitting Practices for Wind Projects” blocks lease sales for offshore wind projects and pauses new approvals for leases, permits or loans for on- and offshore wind projects.   
 
Our view: “Expanding domestic energy production drives innovation, creates jobs and powers the growth that keeps America at the forefront of the global economy,” NAM President and CEO Jay Timmons wrote in a social post Monday.

• “Energy is the lifeblood of our industry, and we look forward to working with President Trump to build our manufacturing nation.”   

Building permits fell 0.7% in December and 3.1% over the year. Permits for single-family homes rose 1.6% in December but declined 2.5% over the year. Permits for buildings with five or more units fell 5.8% from November and 5.4% over the year.

In December, housing starts jumped 15.8% from November but slipped 4.4% from December 2023. Additionally, starts for single-family homes rose 3.3% from November but fell 2.6% from December 2023. Meanwhile, starts for buildings with five or more units soared 58.9% from November but declined 11.3% over the year.

Housing completions decreased 4.8% over the month and 0.8% over the year. Single-family home completions fell 7.4% from November and dropped by the same percentage over the year. Completions for buildings with five or more units decreased 1.7% over the month but grew 9.4% from December 2023.

U.S. import prices advanced 0.1% in December, the same as the previous two months, with both higher fuel and nonfuel prices contributing to the increase. Over the past year, import prices rose 2.2%, the largest year-over-year increase since December 2022. U.S. export prices advanced 0.3% in December, after staying the same in November. Both higher agricultural and nonagricultural prices contributed to the increase. Over the past year, export prices rose 1.8%, the largest year-over-year increase since January 2023.

Fuel import prices increased 1.4% in December, after rising 0.9% in November. These increases are attributed to higher prices for natural gas and petroleum in December. Meanwhile, prices for import fuel rose 0.3% over the past year, the first over-the-year increase since July 2024. Import prices for petroleum advanced 0.3% in December, while import prices for natural gas surged 40.6% over the month.

Nonfuel import prices ticked up 0.1% for the second consecutive month in December. Nonfuel import prices have not declined on a monthly basis since May 2024, when they fell just 0.2%. Higher prices for foods, feeds and beverages and consumer goods more than offset lower prices for nonfuel industrial supplies and materials, capital goods and automotive vehicles in December. The price index for nonfuel imports increased 2.4% over the past year.

After inching up 0.1% in November, agricultural export prices advanced 0.5% in December. Over the past 12 months, agricultural export prices dropped 1.2%. Meanwhile, nonagricultural export prices increased 0.3% in December, with higher prices for nonagricultural industrial supplies and materials and automotive vehicles more than offsetting lower prices for capital goods. Over the past year, nonagricultural export prices rose 2.2%, the largest annual increase since December 2022.

The NFIB Small Business Optimism Index rose 3.4 points in December to 105.1, the second consecutive month above the 51-year average of 98 and the highest rating since October 2018. Of the 10 components included in the index, seven increased, two decreased and one stayed the same. After declining last month, the Uncertainty Index declined another 12 points to 86, as business leaders gain certainty following the election.

Despite increased optimism, inflation is still the top concern for many small business owners, with 20% identifying higher input and labor costs as their primary issue, unchanged from November and surpassing the issue of labor quality by one point. In December, 35% of small business owners reported jobs they could not fill, down 1% from November.

A net 28% of small business owners planned price hikes in December, unchanged from November. A net 29% of small business owners reported raising compensation, down 3% from November. A net 1% of owners reported paying a higher rate on their most recent loan, down 4% from the previous month and the lowest reading since September 2021. Profitability remained under pressure, with a net negative 26% reporting positive profit trends, the same as November. Of those reporting lower profits, 35% claimed weaker sales.

The outlook for general business conditions continued the positive trend, improving 16 points to 52. Small business owners share the sentiment of consumers, who continue to seek lower prices and not just a slowing of price increases. A continuation of the 2017 tax cuts and deregulation will be the key policy areas of concern for the small business community in 2025.

In January, Philadelphia’s regional manufacturing activity increased overall. The index for current general business activity jumped from a revised -10.9 to 44.3, the highest reading since April 2021. Around 51% of firms reported increased activity this month, while just 6.6% saw decreases and 40.7% experienced no change. The indexes for new orders and shipments leaped to 42.9 and 41.0, respectively. Additionally, firms continued to report an increase in employment after steady job gains last month, with the employment index edging up from 4.8 to 11.9. The average employee workweek index surged from -3.7 to 20.5.

Price indexes both rose to recent highs. The prices paid index increased five points to 31.9, the highest reading since December 2022, and the prices received index jumped 24 points to 29.7. In recent months, the prices received index remained much lower than the prices paid index, indicating manufacturers were eating a sizable portion of those higher costs paid.

Looking ahead, most future indicators increased, but concerns about future costs remain. The index for future general business activity rose from a revised 33.8 in December to 46.3 in January. A higher proportion of firms (53.6%) still expected increases in activity. Additionally, the future new orders and shipments indexes rose, with the future shipments index rising to its highest point since July 2021. The index for future employment ticked up eight points to 40.4. After decreasing last month, the capital expenditures index increased 17 points to 39.0. The future prices paid index rose nine points to 67.3, while future prices received slipped one point to 53.6.

Manufacturing activity in New York state declined in January, with the headline general business activity index retreating 14.7 points to -12.6. In January, the new orders index decreased to -8.6, falling 12.9 points, while the shipments index fell 10.8 points to -1.7, reflecting modest declines in both orders and shipments. Unfilled orders improved slightly to -4.7 from -8.4, while inventories dropped from 10.5 to 5.8. Delivery times lengthened, rising 10.9 points to 3.5, while supply availability was unchanged, moving down to 0.0.

Employment increased slightly in January, with the index for the number of employees rising from -6.6 to 1.2, suggesting relatively steady employment levels. The average employee workweek fell from -2.3 to -15.1, signaling a significant decline in hours worked. Both input and selling price increases picked up, as reflected in the prices paid index rising 8.0 points to 29.1 and the prices received index increasing 5.1 points to 9.3.

Manufacturers feel more optimistic about the months ahead. The index for future business activity increased 9.8 points to 36.7, with more than 53% of respondents expecting conditions to improve over the next six months. Employment is forecasted to improve, but slightly less than previously anticipated, slipping 0.3 points from last month, while the average employee workweek is expected to increase, jumping 10.3 points. Meanwhile, inventories are forecasted to drop, and new orders are anticipated to increase, rising 5.9 points to 34.2 in January.

The Producer Price Index for final demand (also known as wholesale prices) increased 0.2% in December, after rising 0.4% in November. In 2024, the final demand index rose 3.3% on an unadjusted basis, which is the largest increase since the year-over-year gain in February 2023 of 4.7%. Prices for final demand excluding foods, energy and trade services inched up 0.1%, the same as November. Prices for these goods increased 3.3% in 2024 after moving up 2.7% in 2023.

In December, prices for final demand services stayed the same, after four consecutive increases, while prices for final demand goods rose 0.6%. The increase in the index can be attributed to prices for final demand energy, which rose 3.5%, and was led by a 9.7% increase in the index for gasoline. The index for final demand goods, excluding foods and energy, was unchanged.

Processed goods for intermediate demand increased 0.3% in December. This change was led by a 1.6% rise in the index for processed energy goods. On the other hand, prices for diesel fuel dropped 1.3%. Prices for processed goods for intermediate demand advanced 0.2% over 2024 after declining 2.8% in 2023.

Meanwhile, prices for unprocessed goods for intermediate demand moved up 3.2% in December, the largest increase since August 2022. The rise was driven by a 10.0% boost in energy materials, led by a 57.7% jump in the natural gas price index. Alternatively, prices for carbon steel scrap dropped 11.7%. Prices for unprocessed goods for intermediate demand rose 5.1% in 2024 after falling 18.7% in 2023.