Tariffs are shaking up American manufacturing. Hurting some, helping others, and changing how every company plays the game. New data gives the first clear look at what’s really happening in the nation’s industrial heartland and what it means for the future of the U.S. industry.
One in three manufacturers report a direct hit on sales from tariffs, positive or negative. Material costs are rising, holding back growth for about 40% of firms. Yet the sector remains defiantly optimistic: two-thirds of manufacturers still project growth in 2026.
These numbers come via new research by MAGNET, the nonprofit manufacturing consultancy I lead, drawn from hundreds of companies across Ohio, a microcosm of what’s playing out nationwide.
For Now, Losses Outweigh The Gains
Tariffs aren’t hitting manufacturers in isolation. They’re colliding with a broader climate of economic instability. In fact, economic uncertainty now rivals workforce shortages as the top barrier to growth, illustrating how interconnected these pressures have become.
But when you look specifically at tariff impact, the picture is clear: The bad currently outweighs the good. Slightly more companies (18%) are reporting losses as are reporting gains (15%). And the scale of those losses far exceeds the upside. Manufacturers seeing tariff-related declines report an average hit of (-16%), nearly double the average 9% bump among those benefiting. Meanwhile, reshoring has gained some ground, but slowly. Nine percent of manufacturers have brought back production to the U.S., more than double the level in 2021 (4%).
The bottom line: tariffs are reshaping the industry, not yet revitalizing it. But manufacturers aren’t resigned to the imbalance. Nearly a quarter say they expect tariffs to drive sales growth in the future, reflecting the same optimism that defines the sector even in these unsettled times.
More Tariff Takeaways
A few additional ways that tariffs are impacting manufacturers today:
- Small suppliers are feeling the sharpest pain. Tariffs are landing unevenly across the supply chain, and smaller manufacturers—particularly those tied closely to large OEMs who’ve cut orders—are absorbing the hardest blows. Some are reporting losing as much as 40% of their revenue. These are companies operating on thin margins to begin with, so the result of tariff volatility is magnified.
- Proprietary product makers and custom manufacturers have taken a divergent path. Among companies seeing losses, a striking 73% produce proprietary products, which are more vulnerable to tariffs because they’re the most likely to be exported. Meanwhile, manufacturers who produce parts to specification for OEMs have done much better, benefiting as some larger companies reshore parts of their supply chain.
- Tariffs have interrupted COVID recovery. The number of manufacturers who said the high cost of raw materials hampered their growth peaked at 56% in 2021. It had been trending down toward pre-pandemic levels (25% versus 32%), but this year’s tally (40%) shows the trend’s been interrupted by tariffs and supply chain volatility. The number of manufacturers who say they’ve been severely impacted is up, as well, from 7.7% in 2023 to 10.9% in 2025. That’s an increase of more than 40%, meaning many more manufacturers are feeling acute pain from raw materials costs than they were in 2023.
- Innovation is quietly slowing. Inflationary effects and rising costs are one thing, but a less-noticed impact of tariffs has been on innovation. As leaders shift their time, focus, and resources toward managing tariff volatility, there’s been less time for making new things. Most manufacturers—71%—don’t list new product development among their top 3 priorities, and almost 25% fewer companies launched new products in 2025 compared to two years ago.
What Comes Next
The real story of tariffs isn’t found in national forecasts it’s written on factory floors. For some, tariffs have opened doors to new customers; for others, they’ve closed markets overnight.
And the story isn’t finished. Several major tariff policies are now before the courts, and no one knows how long they’ll last or what will replace them. That uncertainty doesn’t just hang over the next quarter. It’s reshaping the way manufacturers plan for the next decade.
The lesson is clear: manufacturers can’t wait for clarity. The ones who will endure won’t be those betting on policy shifts, they’ll be those ready for any outcome. They’ll diversify customers, strengthen supply chains, automate relentlessly, and keep innovating even when margins tighten.
For smaller firms, the pressure is greater but so is the potential. Agility is their biggest advantage. The ability to pivot fast, adapt early, and turn disruption into momentum will decide who thrives.
And despite the turbulence, most manufacturers remain strikingly optimistic. Most believe tariffs will ultimately strengthen their businesses. If that confidence proves right, the result will be a meaningful boost not just for companies, but for the economy overall. Because policy shifts come and go, but when optimism meets adaptability, American manufacturing moves forward.
