Raw material volatility, cited by 26% of respondents, and labor costs at 21% represent the primary hurdles for facility leaders. According to Cara Walton, director of manufacturing market intelligence at Wipfli, the lag in adjusting customer pricing to reflect tariff-induced costs is creating significant margin pressure. This friction is particularly acute for smaller suppliers navigating complex contract negotiations with larger buyers.
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US Manufacturers Face Margin Squeeze Amid Tariff and Material Volatility
Tariffs and raw material price volatility are forcing American manufacturers into a delicate balancing act, as rising input costs outpace the ability to pass expenses to customers. A new Wipfli report surveying 456 facilities reveals that while 2026 growth expectations remain resilient, profitability is increasingly tethered to pricing agility.
Financial performance varies sharply by sector. Metal formers currently face the most severe margin erosion, while aerospace, defense, and infrastructure segments are outperforming the broader market. Despite these headwinds, roughly 60% of manufacturers anticipate revenue growth of at least 5% in 2026. To capture this growth, firms are prioritizing operational discipline, with capital investment holding steady at 5% of revenue, largely directed toward automation and enhanced data analytics to better align production with actual market demand.
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