Tariff Hikes Force Manufacturers to Freeze Hiring
Manufacturers are freezing hiring and pausing expansion plans due to recent tariff-induced cost hikes on imported steel and components. A Supply Chain Dive report indicates that the increased costs and market uncertainty are failing to spark significant reshoring as intended. Industry groups are now calling for more discretion in tariff application to provide stability for project bidding.
- A recent Supreme Court ruling on February 20, 2026, found that the president's use of the International Emergency Economic Powers Act (IEEPA) to impose broad tariffs in 2025 exceeded his authority. This decision invalidates a significant portion of the tariff regime that was put in place, leading to companies seeking refunds on potentially $142 billion in tariffs paid. - In response to the Supreme Court's decision, the President signed an executive order imposing a new 10 percent tariff on all imports under Section 122 of the Trade Act of 1974, which took effect on February 24, 2026, and is scheduled to last for 150 days. This move signals continued trade policy volatility, which has become the top-cited risk for global manufacturers, surpassing supply chain issues. - The tariffs are having a mixed but generally negative impact on manufacturing employment; while domestic steel and aluminum producers have seen some job growth, this has been more than offset by job losses in downstream industries that use these metals as inputs due to higher costs. One Federal Reserve study indicated that the 2018 tariffs resulted in a net decrease in manufacturing employment. - The automotive sector is particularly vulnerable due to its complex global supply chains, with tariffs of 25% on steel and aluminum-containing "derivative" products directly impacting the cost of components. Analysts estimate these duties could raise the price of an average new vehicle by $2,500–$5,000. - Despite the tariffs, significant reshoring has been driven by a desire for more resilient supply chains, with over 2.5 million manufacturing jobs announced through reshoring and foreign direct investment since 2010. However, a substantial portion of this is concentrated in high-tech sectors like semiconductors and EV batteries. - The Section 301 tariffs specifically targeting China, which range from 7.5% to 25% on goods worth over $360 billion, remain in effect and have been expanded. These tariffs are a key tool in the ongoing trade tensions and have faced legal challenges at the World Trade Organization. - In response to the tariffs, manufacturers are increasingly adopting "friend-shoring" strategies, focusing their supply chain networks on countries that are political and economic allies to reduce exposure to geopolitical risks and stabilize access to critical materials. - For internal audit functions, the evolving tariff landscape necessitates a greater focus on supply chain risk assessments, compliance with rapidly changing trade regulations, and advising on the financial implications of sourcing decisions. This includes stress-testing supply chains for geopolitical disruptions and evaluating the cost-benefit of reshoring versus other mitigation strategies.
