Tariff 'Chaos' Drags Key Texas Manufacturing Gauge to Worst Since 2020

A widely followed measure of Texas manufacturing activity weakened significantly as executives used words like “chaos” and “insanity” to describe the turmoil spurred by President Donald Trump’s tariffs, according to a report by the Federal Reserve Bank of Dallas.

A general gauge of business activity plunged to its worst reading since May 2020 based on recent survey responses from 87 Texas manufacturers, the Dallas Fed said Monday. While responses indicated modest current growth in production, company outlooks fell to a post-pandemic low as respondents pointed to frazzled supply lines and difficulty in forecasting.

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Even as a majority of companies said they would pass higher costs onto customers, some 38% said it’s becoming harder or much harder to do so. US prices have increased more than 20% in the past four years, increasing concern that consumers may be fatigued, or have less spending power, to tolerate another ramp up in inflation.

“The tariff issue is a mess, and we are now starting to see vendors passing along increases, which we will have to in turn pass along to our customers,” a respondent in the printing industry told the Dallas Fed. Another in food manufacturing said “tariffs and tariff uncertainty are wreaking havoc on our supply lines and capital spending plans.”

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