North American Manufacturers Face Declining Activity Amid Tariffs, While Asian Suppliers Thrive
In March 2025, reports from the GEP Global Supply Chain Volatility Index revealed a stark divide in global manufacturing conditions: North America faced significant declines, while suppliers in Asia operated at full capacity. This report, based on a survey of approximately 27,000 businesses, illuminated several critical trends across different regions. The index's value dropped to -0.51, marking its lowest point in nearly five years. This decline reflected the sharpest decrease in purchasing activity among North American manufacturers in years, particularly pronounced in Canada, where procurement practices tightened remarkably. This downturn is attributed largely to tariffs and the resultant uncertainties affecting companies in the region. John Piatek, GEP's Vice President of Consulting, stated that many organizations were compelled to reconsider their global supply strategies, pushing suppliers to bear the burden of tariffs and exploring methods to cut costs.
In contrast, the Asian market showcased resilience, operating near full capacity and experiencing a slight boost in procurement activities led by key players such as China and India. While North American manufacturers were strategically retreating, causing significant slack and reduced inventories, European countries were displaying resilient trends, with the manufacturing index showing tentative signs of recovery despite low stockpiling rates. The UK, however, illustrated particular weaknesses, with its index falling to -1.23, indicating constrained supplier activities due to economic slowdowns.
Looking closer at North America, the data plainly illustrated the challenges faced by manufacturers, highlighted by a significant increase in spare capacity across the supply chains in the U.S., Mexico, and Canada. This shift in dynamics has compelled procurement managers internationally to cater to the uncertainties surrounding trade conditions. Particularly in the U.S. and Canada, there were reports of diminished purchasing activities and hesitance to build inventories, which decreased to the lowest rates seen in nearly a decade, indicating a broader trend of caution among manufacturers.
On the global front, while material shortages remained manageable, signaling a well-stocked supply chain, global transportation costs fell to their lowest year-to-date levels, suggesting stability in shipping and logistics. As North America struggles with depressed manufacturing activities and increasing tariffs, the overall picture remains complex, with Asia enjoying a juxtaposed thriving supply environment.
The March report underscores the critical need for manufacturers in North America to navigate these difficult conditions proactively while also adapting their supply chain strategies to accommodate both current challenges and future uncertainties. As the GEP Global Supply Chain Volatility Index continues to evolve, stakeholders in these markets are advised to stay vigilant and responsive to fluctuating global demand and cost pressures.
The next release is anticipated on May 13, 2025, where broader insights into these volatile conditions will be further elucidated, offering a comprehensive view of the supply chain landscape. Until then, businesses must engage in strategic planning and adapt their practices to respond to both bright and troubling signals across varied global markets.
In contrast, the Asian market showcased resilience, operating near full capacity and experiencing a slight boost in procurement activities led by key players such as China and India. While North American manufacturers were strategically retreating, causing significant slack and reduced inventories, European countries were displaying resilient trends, with the manufacturing index showing tentative signs of recovery despite low stockpiling rates. The UK, however, illustrated particular weaknesses, with its index falling to -1.23, indicating constrained supplier activities due to economic slowdowns.
Looking closer at North America, the data plainly illustrated the challenges faced by manufacturers, highlighted by a significant increase in spare capacity across the supply chains in the U.S., Mexico, and Canada. This shift in dynamics has compelled procurement managers internationally to cater to the uncertainties surrounding trade conditions. Particularly in the U.S. and Canada, there were reports of diminished purchasing activities and hesitance to build inventories, which decreased to the lowest rates seen in nearly a decade, indicating a broader trend of caution among manufacturers.
On the global front, while material shortages remained manageable, signaling a well-stocked supply chain, global transportation costs fell to their lowest year-to-date levels, suggesting stability in shipping and logistics. As North America struggles with depressed manufacturing activities and increasing tariffs, the overall picture remains complex, with Asia enjoying a juxtaposed thriving supply environment.
The March report underscores the critical need for manufacturers in North America to navigate these difficult conditions proactively while also adapting their supply chain strategies to accommodate both current challenges and future uncertainties. As the GEP Global Supply Chain Volatility Index continues to evolve, stakeholders in these markets are advised to stay vigilant and responsive to fluctuating global demand and cost pressures.
The next release is anticipated on May 13, 2025, where broader insights into these volatile conditions will be further elucidated, offering a comprehensive view of the supply chain landscape. Until then, businesses must engage in strategic planning and adapt their practices to respond to both bright and troubling signals across varied global markets.
Topics Consumer Technology）
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