Manufacturing in the U.S. dropped last month to its lowest point since before the 2016 presidential election as trade tensions continue to heat up between the U.S. and several major trading partners.
The Institute for Supply Management’s (ISM) Purchasing Managers Index dipped to 52.1 from 52.8 in May, hitting its lowest point since October 2016. Supplier deliveries declined 2.6 percentage points to 52, while inventories sank two percentage points to 50.9, according to ISM.
Meanwhile, IHS Markit’s U.S. Manufacturing Purchasing Managers’ Index sank in May to its lowest level since the housing-market crisis a decade ago, dropping more than two points to 50.5.
“May saw U.S. manufacturers endure the toughest month in nearly 10 years, with the headline PMI down to its lowest since the height of the global financial crisis,” said Chris Williamson, an IHS Markit economist.
The manufacturing losses come just as President Trump hit China and Mexico with heavy tariffs that are expected to hurt U.S. companies and consumers by extension.
The president last month announced a 5 percent tariff on all products from Mexico scheduled to take effect on June 10 and continue until “the Illegal Immigration problem is remedied.” The U.S. will progressively raise tariffs to 25 percent by October if Mexico does not stem the flow of illegal immigration to the U.S., the White House has said. The Trump administration also raised tariffs on $200 billion in Chinese goods from 10 percent to 25 percent last month, not counting the additional 25 percent tariff the U.S. already levies on $50 billion worth of Chinese high-tech products.
Trump, who has described himself as supportive of tariffs as a negotiating tool, said last month on Twitter that, “Tariffs will make our Country MUCH STRONGER, not weaker. Just sit back and watch!”