Machine Shops NAICS 332710

Apr 18, 2025 - Shops Facing Higher Costs

• New tariffs on steel and aluminum imports to the US have a direct impact on small fabricators’ cost structures, bidding strategies, and overall competitiveness, according to Exiil, a provider of software to metal manufacturers. In March, President Trump raised steel and aluminum import tariffs to the US by 25%, ending all country exemptions, in addition to hiking tariffs on China, according to Reuters. Russian aluminum imports carry a tariff of 200%. Beyond raw metal, the US has increasingly added “downstream” or “derivative” products – such as stamped parts, fasteners, tubing, wire, or other items with high steel/aluminum content – to existing Section 232 tariffs. As a result, machine shops face higher materials costs. Even shops that source metals domestically are likely to pay more for metal as US mills often raise their prices when foreign competitors’ costs go up – because the “floor” of the market shifts.
• Gardner’s Metalworking Index, a measure of the current state of the metalworking and machining activity, topped 50 in March for the first time in two years, Modern Machine Shop (MMS) reported in April. March’s reading of 50.7 marked the sixth consecutive month of improving conditions for the metalworking sector. (A reading above 50 indicates the market is expanding.) The March increase was driven largely by significant gains in new orders and production. Other components of the index – backlog, employment, exports and supplier deliveries – saw modest improvements or remained flat. The above-50 reading – the first since February 2023 – signals cautious optimism for the metalworking sector, according to MMS.

• US manufacturers reduced their new orders for metal cutting, forming, and fabricating equipment by 29.8% from December to January, according to the latest US Manufacturing Technology Orders (USMTO) report from the Association for Manufacturing Technology (AMT). The steep decline reversed several months of improving demand but compared well to the same period in 2024. January new order volume from contract machine shops (aka job shops) fell more than 30% from December. Job shops had demonstrated some demand growth during the last quarter of 2024. The January USMTO report revealed the decline in demand was more severe in the Northeast, Southeast, North Central-West, and South Central, with each region reporting month-to-month order values for metal-cutting falling by double-digit percentages – by as much as -52.1% in the Northeast and Southeast regions. The West posted a more modest 8.7% decline, while the North Central-East fell by just -0.7%.
• US manufacturers have much to lose in a trade war between the US and its largest trading partner Mexico, The New York Times reports. During his campaign, President-elect Donald Trump vowed to slap 25% tariffs (or higher) on all goods from Mexico unless it stopped the flow of migrants and drugs to the US. While Mexico depends heavily on trade with the US – exporting some 80% of its goods to America – it accounted for nearly 16% of overall US exports in 2022, according to the Office of the US Trade Representative. Tariffs on Mexico and China, another Trump target, would have widespread ramifications for manufacturers, making it more expensive to produce goods that use foreign materials and components. And if other countries respond with retaliatory tariffs, it could also make it more expensive for manufacturers to export goods to foreign markets, according to Manufacturing Dive.