Factories across the globe—from Japan to Britain to the United States—experienced a slowdown in March as businesses scrambled to prepare for a fresh wave of U.S. tariffs. However, some saw a temporary surge in production as they rushed to push goods to market before the new measures took effect, according to global economic surveys released Tuesday.
On Wednesday, U.S. President Donald Trump is expected to unveil his latest tariff proposal, branding the announcement as "Liberation Day." This move follows his earlier imposition of tariffs on aluminum, steel, and automobiles, alongside increased duties on all Chinese imports.
Trump has insisted that no country will be exempt, sparking fears among policymakers that these tariffs could deliver another hit to a fragile global economy still recovering from the COVID-19 downturn and grappling with geopolitical uncertainty.
Manufacturing activity across much of Asia faltered in March, weighed down by weak global demand and the looming trade restrictions, as reflected in closely watched Purchasing Managers' Index (PMI) data. Japan’s factory sector contracted at its fastest pace in a year, South Korea’s downturn accelerated, and Taiwan’s output weakened further.
China was a notable exception, with factory activity rebounding as manufacturers rushed to ship products before U.S. tariffs took effect. However, analysts warn this surge is likely temporary. "China’s industry is benefiting from ‘tariff front-running’ at the moment," said Julian Evans-Pritchard of Capital Economics. "But it won’t be long before U.S. tariffs turn from a boost to a burden."
In the U.S., where manufacturing had expanded in early 2024, activity shrank in March. The Institute for Supply Management’s (ISM) manufacturing PMI fell to 49.0 from 50.3 in February—signaling contraction. A sub-index for new orders hit its lowest level since May 2023.
Across the Atlantic, European manufacturers experienced a rare rebound, with output rising for the first time in two years. Economists suggest this uptick may be short-lived, driven by a rush of orders from the U.S. ahead of the tariff deadline. "Much of this increase likely stems from front-loading orders before the tariffs hit, meaning we could see a slump in the coming months," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
Germany, Europe’s industrial powerhouse, posted its first production increase in nearly two years, while France’s downturn softened. Meanwhile, Britain’s manufacturers endured a brutal March, as tariff concerns and impending tax hikes triggered a sharp drop in new orders and weakened business confidence.
Despite growing investor anxiety, global stock markets edged higher on Tuesday, buoyed by Wall Street gains, while gold surged to an all-time high.