News

The Securities and Exchange Commission this week reversed Biden-era guidance that required publicly traded companies to include environmental and social activist shareholder proposals on proxy ballots (InvestmentNews).

What’s going on: In a move that NAM President and CEO Jay Timmons called a “depoliticiz[ation of] the proxy process” and “a crucial plank of President Trump’s pro-manufacturing deregulatory agenda,” the SEC rescinded Staff Legal Bulletin 14L, which had allowed activists to mandate consideration of social policy proposals on corporate proxy ballots—even when the policies in question were unrelated to a company’s business.

Why it’s important: SLB 14L “empowered activists at the expense of manufacturers and Main Street investors—turning the proxy ballot into a debate club, forcing businesses to court controversy and divert resources from growth and value creation,” Timmons continued.

• Replacing SLB 14L with the new SLB 14M “return[s] the SEC’s review of shareholder proposals to a company-specific process based on relevance to a business’s operations and its investors’ returns,” which will “allow manufacturers to focus on what they do best: investing for growth, creating jobs and driving the American economy.”

What we’ve been doing: Since SLB 14L was adopted in 2021, the NAM has been a leading voice calling on the SEC to reverse course.

• Most recently, the NAM, along with more than 100 manufacturing associations, outlined for President Trump more than three dozen regulatory actions the new administration could take across federal agencies to boost the manufacturing economy and end the regulatory onslaught—including rescinding SLB 14L.
• The NAM also has called on President Trump’s nominee to chair the SEC, Paul Atkins, to take steps to depoliticize the proxy process.

The introduction of artificial intelligence has been a boon to manufacturing, and the technology will continue to have a positive impact—as long as regulations are “right-sized,” manufacturers told Congress this week.

What’s going on: “Manufacturers are utilizing AI in myriad ways on the shop floor and throughout their operations,” the NAM told the House Subcommittee on Commerce, Manufacturing and Trade in a statement for the record at Wednesday’s hearing, where data was cited.

• “The diverse use-cases of AI in manufacturing suggest a need for a cautious regulatory approach to this groundbreaking technology: one that supports innovation and U.S. leadership in AI while providing context-specific, risk-based, right-sized rules of the road for manufacturers,” the NAM said.
• Giving testimony at the hearing, Siemens USA President and CEO and NAM Board Member Barbara Humpton discussed the many benefits of using AI in manufacturing and emphasized the need to ensure that AI regulations include “targeted” rather than “overly broad” definitions.

Industrial vs. consumer-focused AI: First, it’s important to distinguish between industrial and consumer-facing AI, Humpton told the subcommittee members.

• “Industrial AI is different from consumer AI,” she said. “Industrial AI uses controlled data from the manufacturing environment to help manufacturers create business value. Think better products, more efficient operations, a more prepared workforce. … AI will enable all companies—from startups to small and medium enterprises to industrial giants—to thrive in this new era of American manufacturing.”
• In written testimony, she added that “the core distinction of industrial AI is that it is trained on highly monitored data from sensors and machines, providing a more reliable foundation for training AI models.”

Simple, singular and targeted: Regulation of AI should be undertaken with a light touch and following a full accounting of on-the-books laws to prevent duplicative and/or contradictory rules, the NAM said.

• “[P]olicymakers should always review existing laws and regulations before enacting new ones, because most uses of AI correspond to tasks and objectives that industry has faced for a long time and that are thus highly likely to have already been addressed by existing laws and regulations,” said the NAM, which also referenced its first-of-its-kind AI report, “Working Smarter: How Manufacturers Are Using Artificial Intelligence,” released last May.
• “Similarly, policymakers must right-size any compliance burden associated with AI regulation,” the NAM continued. “The ubiquitous use of AI throughout modern manufacturing, as well as manufacturing’s dependence on innovation, underscore the need for rules that enable rather than hinder manufacturers’ development and adoption of AI systems.”

Protect without hindering: Congress “must advance industrial AI by prioritizing strong rules for digital trade, especially to include strong protections for source code and algorithms,” Humpton went on in her written testimony. “We encourage policymakers to build upon the success of previous U.S.-led efforts to protect intellectual property.”

• Legislators must also safeguard privacy and protect against baseless legal claims, the NAM said. “[I]t is … crucial that Congress take steps to maintain the privacy of personal data when utilized in AI contexts. … A federal standard should avoid a patchwork of state-level rules by fully preempting state privacy laws; it also should protect manufacturers from frivolous litigation.”

The last word: “The range and importance of uses of AI—transforming every aspect of the core of manufacturers’ operations—make it clear that AI has become integral to manufacturing,” said the NAM. “With the right federal policies, manufacturers in the U.S. will continue to devise new and exciting ways to leverage AI to lead and innovate and stay ahead of their global competitors.”

To lift much of the burden on manufacturers in the U.S., Congress must reinstate pro-growth tax measures, enact commonsense regulatory reforms and undertake comprehensive permitting reform. That was the main message of Click Bond CEO and NAM Small and Medium Manufacturers Group Chair Karl Hutter to legislators yesterday on Capitol Hill.
 
What’s going on: “American businesses now shoulder a staggering $3 trillion annually in regulatory costs—disproportionately impacting manufacturers,” Hutter told the House Committee on Small Business at Wednesday’s hearing.

• “Unfortunately, small companies get hit twice—with unworkable regulations that apply to them [and again with] compliance and reporting requirements that larger firms are forced to pass down. Fortunately, Congress and the Trump administration have the opportunity to reverse course.”   

Rocket fuel for manufacturing: The 2017 Tax Cuts and Jobs Act “was rocket fuel for Click Bond,” said Hutter—whose Carson City, Nevada–based family business makes adhesive-bonded fasteners used by the U.S. military, commercial aviation industry and NASA.

• “The new 21% corporate tax rate allowed us to raise wages for production employees, invest in capital equipment, strengthen our employee tuition support program and accelerate the timeline for constructing a new facility. The new 20% pass-through deduction likewise empowered our suppliers and partners to reinvest in their businesses, readying them to support our growth.”  

Changes for the worse: But growth was halted in 2022 and 2023, when provisions from the TCJA began to expire. Worse still: More pro-growth tax measures are due to expire at the end of this year—unless Congress intervenes.

• “It is now more expensive for Click Bond to conduct R&D, the lifeblood of both our product and process innovation,” according to Hutter. “It’s more expensive for us to purchase capital equipment, the tools that will unleash the productivity of our team. And it’s more expensive for us to finance job-creating investments such as that state-of-the-art, sustainable manufacturing facility.”  

Ill effects: According to a recent study released by the NAM, nearly 6 million American jobs and more than $1 trillion of U.S. GDP will be at risk if Congress fails to act by the end of this year to preserve TCJA’s pro-manufacturing provisions.
 
What should be done: Manufacturers everywhere are struggling under the weight of both these provisions’ expiration and needless, out-of-date government requirements, Hutter went on. To fix these problems, he said, Congress should:

• Unwind “outdated chemicals reporting requirements that force us to look backward in time and deep into our supply chain”;
• Stop unnecessary permitting roadblocks by the Environmental Protection Agency at the state and local levels;
• Roll back expensive energy and labor mandates;
• Undertake “comprehensive permitting reform”; and
• Make permanent the pro-manufacturing tax provisions scheduled to sunset at the end of 2025 and bring back already expired provisions that boosted the sector and the U.S. economy as a whole.

The final say: “Congress has a critical opportunity to right-size the regulatory landscape, put an end to permitting delays and protect manufacturers from devastating tax increases,” Hutter concluded. “I encourage you to seize [it] … because when manufacturing wins, America wins.”
 

For a stronger, more competitive America, Congress must make permanent the pro-growth tax provisions from President Trump’s 2017 Tax Cuts and Jobs Act, NAM President and CEO Jay Timmons and House Ways and Means Committee Chairman Jason Smith (R-MO) wrote in a recent op-ed for the Washington Examiner.

What’s going on: “The choice is clear. Congress must deliver the results the American people voted for on Election Day by extending and expanding Trump’s pro-growth tax policies, which have worked so well.”

• The reforms allowed manufacturers “to hire, expand and invest in their communities” at historic rates, with a particularly positive effect on small and medium-sized businesses.
• Georgia-based Winton Machine Company, which produces machinery used in tubular parts and coaxial cable fabrication, would not have been able to expand its workforce, raise employee pay or purchase critical technology had it not been for the TCJA, as Winton CEO and Co-Owner and NAM board member Lisa Winton told Congress in 2023.
• Austin Ramirez, president and CEO of hydraulic and electromechanical control systems maker Husco in Wisconsin and NAM Executive Committee member, told legislators that tax reform allowed his family-owned company “to create jobs, expand research and development, compete globally and invest in its future, including the most significant renovation of his business in 70 years,” Timmons and Chairman Smith wrote.

What’s at stake: “Key provisions of the 2017 Trump tax reforms have already expired, and many more are set to lapse later this year,” Timmons and Chairman Smith continued.

• “Without swift action, manufacturers will miss out on tax incentives for research and development and equipment purchases, while small businesses and family-owned manufacturers will see their tax rate double to as high as 43.4%—all at a time when global competition is intensifying.”

According to a recent NAM study cited in the op-ed, if Congress fails to preserve tax reform by the end of this year:

• Nearly 6 million U.S. jobs—more than 1 million of them in manufacturing—will be lost; and
• America will lose some $1.1 trillion in GDP and $540 billion in wages.

What must be done: Congress must act now to restore the pro-manufacturing tax provisions that have already sunset and make permanent those that are scheduled to expire, Timmons and Chairman Smith concluded.

• “With Trump leading the charge, it is time for Congress to deliver, protect these reforms and set American workers up for success in 2025 and beyond. Together, we can ensure the next chapter in America’s story is one of growth, opportunity and strength.”

Former Transportation Security Administration Assistant Administrator for Strategic Communications and Public Affairs Alexa Lopez has joined the NAM’s communications team.
 
What’s going on: Lopez, a native of Dayton, Ohio, is the NAM’s vice president of communications and public affairs, a newly created position.

• “Alexa knows how to navigate complex challenges, craft compelling narratives and drive real impact,” NAM President and CEO Jay Timmons said. “She has built a career on delivering results, and manufacturers will benefit from her ability to elevate our industry’s voice at a time when manufacturers’ influence on the future has never been more important.”
• Lopez holds a Master of Public Affairs and a Master of Arts in Arts Administration from the Indiana University O’Neill School of Public and Environmental Affairs.

Proven track record: At the TSA, Lopez led all media operations, strategic communications, marketing and branding and multimedia efforts and served as adviser to the TSA administrator. She was at the agency for four years.

• Prior to that, Lopez worked in public affairs at the Federal Emergency Management Agency, the American Society of Civil Engineers, Ogilvy Public Relations and the City of Bloomington, Indiana.

On Feb. 1, President Donald Trump imposed 25% tariffs on products from Canada with lower 10% on energy products, 25% tariffs on products from Mexico and an additional 10% on products from the People’s Republic of China.

NAM Vice President of International Policy Andrea Durkin and her team break down the actions for manufacturers:

Executive orders impose tariffs on Canada, China and Mexico: On Feb. 1, President Trump, through three separate executive orders, declared a national emergency and invoked the International Emergency Economic Powers Act to apply ad valorem tariffs on products from Canada, Mexico and China, citing the sustained influx of illicit opioids and other drugs.

• Canada Executive Order:“Imposing Duties to Address the Flow of Illicit Drugs Across Our Northern Border”
• China Executive Order: “Imposing Duties to Address the Synthetic Opioid Supply Chain in the People’s Republic of China”
• Mexico Executive Order: “Imposing Duties to Address the Situation at the Southern Border”

How tariffs will apply:

• For products from Canada:
• A 25% tariff will be applied in addition to any already applicable duties, fees or charges.
• A 10% tariff will be applied to “energy or energy resources” defined as crude oil, natural gas, lease condensates, natural gas liquids, refined petroleum products, uranium, coal, biofuels, geothermal heat, hydropower and critical minerals.
• For products from China:
  • A 10% tariff will be applied in addition to any already applicable duties, fees or charges.
  • For products from Mexico:
  • A 25% tariff will be applied in addition to any already applicable duties, fees or charges.
• No duty drawback:No drawback shall be available with respect to the duties imposed pursuant to these orders.
• De minimis: Duty-free de minimis treatment will be suspended.

Timing of the tariffs:

• Tariffs will apply from Feb. 4, 2025.
• Tariffs will not apply to goods loaded onto a vessel or in transit before 12:01 a.m. Feb. 1 with certification to U.S. Customs.

Duration of tariffs: The tariffs will remain in place until the president determines that the governments of Canada, Mexico and/or China have taken “sufficient action to alleviate the crisis,” including through cooperative enforcement actions.

A retaliation clause: The president may increase or expand in scope the tariffs imposed under these executive orders if the governments of Canada, Mexico and/or China impose retaliatory tariffs.

Reports to Congress: The Secretary of Homeland Security, in coordination with the Secretary of the Treasury and other agencies, will submit recurring and final reports to Congress on the state of the national emergency under these orders.

What’s next: The NAM issued a statement in response, and the NAM trade team is analyzing the impact on manufacturers and will continue to engage policymakers on these sweeping trade actions.

How USMCA Boosted North American Supply Chains

Existing home sales increased 2.2% in December and jumped 9.3% from December 2023, the largest annual gain since June 2021. Housing inventory declined to 1.15 million units, reflecting a 13.5% decrease from November but up 16.2% from last year. The median existing home price was $404,400, up 6.0% from last year, with all four U.S. regions reporting price increases.

Single-family home sales rose 1.9% in December, with the median price increasing 6.1% from December 2023 to $409,300. Condo and co-op sales grew 5.1% in December and 2.5% from the previous year, with the median price up 4.5% from the prior year to $359,000.

Homes were typically on the market for 35 days in December, up from 32 days in November and 29 days in December 2023. First-time buyers made up 31% of sales in December, up slightly from 30% in November and 29% in the same month last year. All-cash sales accounted for 28% of transactions in December, up from 25% in November but down from 29% in December 2023. Meanwhile, investors or second-home buyers represented 16% of homes purchased in December, up from 13% in November and the same as December 2023. Distressed sales, including foreclosures and short sales, represented 2% of purchases in December, unchanged from the past two months and from the previous year.

The S&P Global Flash U.S. Manufacturing PMI rose slightly from 49.4 in December to 50.1 in January, signaling nominal growth in manufacturing after six months of contraction. Both factory production and new orders increased for the first time in six months. Employment also rose for the third month in a row, and the rate of job creation is the highest since July. Supplier delivery times lengthened, indicating busier supply chains, but this was offset by the greatest drop in inventories in 17 months.

The improvement in sentiment was notable in the manufacturing sector, soaring to the highest reading since May 2022, adding to suggestions that activity may improve further in the coming months. Respondents cited a more business-friendly new administration in terms of looser regulation and lower taxes as beneficial to the outlook. On the other hand, others cited concern over tariffs, a strong dollar and higher prices.

Manufacturing activity contracted modestly in the Tenth District in January, while expectations for future activity remained positive but slipped from 17 to 15 from December. The Tenth Federal Reserve District encompasses the western third of Missouri; all of Kansas, Colorado, Nebraska, Oklahoma and Wyoming; and the northern half of New Mexico. The month-over-month decrease in activity was due to modest declines in both durable and nondurable manufacturing. Most month-over-month indexes were negative, apart from employment, prices and finished goods inventories.

Production fell three points to -9, while new orders improved from -16 to -6. Employment remained roughly the same in January. The backlog of orders remained negative but ticked up to -19 from -22. The year-over-year composite index for factory activity increased from -16 to -9 but stayed negative. Like in December, capital expenditures, prices received and prices for raw materials all increased year-over-year in January while other indexes declined.

This month, survey respondents were asked about their firms’ exports and imports. More than half of firms (55%) sell 1% to 25% of their products or services outside of the U.S., while more than two-thirds (67%) source 1% to 25% of their inputs from outside of the U.S. On the other hand, more than one-third (36%) of firms do not sell their products or services internationally, and only 16% of firms source none of their imports from outside of the U.S. Additionally, a majority of firms do not expect their sourcing decisions to change in the next year (57%) or next three years (53%). Almost a quarter of firms (23%) anticipate slight reductions in internationally sourced inputs in the next three years. Over the next year, 16% of firms forecast increases in sourcing outside of the U.S., while 18% expect increases in the next three years.

Weeks ahead of the inauguration, manufacturers provided the Trump administration with a list of several dozen regulations that should be reconsidered or rescinded to protect manufacturers’ competitiveness. This list covered everything from power plant regulations to employment rules, and some of its recommendations have already been enacted—such as the revocation of the ban on liquefied natural gas exports, which President Trump ordered on Monday.

But signing executive orders is not enough to right-size the regulatory state and remove restrictions on manufacturers’ growth—in general, final agency rules can only be amended through notice-and-comment rulemaking. What does the administration need to do to make this rollback stick?

NAM Chief Legal Officer Linda Kelly spoke to us about the policy and legal landscape that the new administration will have to navigate.

The long term: “Manufacturers need these regulatory changes to withstand the test of time—and legal scrutiny,” said Kelly. Any changes to regulatory policy will be met with legal challenges, which will delay their benefits for manufacturers.

• The new administration needs to do everything by the book and carefully follow recent pronouncements in administrative law, or its policies will not survive, Kelly warned.
• Conducting robust cost-benefit analysis, soliciting public input and tying its actions to congressional mandates will all help the administration make its policies stick, she advised.

The legal hurdles: The big developments overshadowing this round of regulatory reform include the Supreme Court’s Loper Bright decision, which freed courts from deferring to agencies’ interpretations of statutes. Instead, the courts themselves must decide on the “best reading of a statute.”

• When the Trump administration faces judges skeptical of regulatory rollbacks and no longer obligated to defer to agency interpretation, they must come armed with well-reasoned justifications supported by data and informed by the expertise of the regulated public.
• In many cases, the NAM can provide this expertise and crucial data through the rulemaking process, and the NAM Legal Center can help defend pro-manufacturing policies by intervening in litigation and filing amicus briefs.

Agencies in need: Another new requirement for the administration emerged from Ohio v. EPA, which strengthened the requirement that agencies meaningfully respond to objections to proposed rules raised during public comment periods.

• Here again, manufacturers will play a crucial role, said Kelly, offering agencies the evidence they need to support their policymaking.

The last word: “The Trump administration has to do its homework on the front end,” said Kelly, to survive the inevitable legal challenge that will follow its regulatory changes. “Manufacturers and the NAM Legal Center stand ready to help create a court-durable regulatory environment that enables innovation and prosperity.”