Federal Reserve data shows U.S. factory output rose again in March, but economists warn the Trump tariff shift could bring near-term strain.

By yourNEWS Media Newsroom

U.S. manufacturing activity expanded again in March, though at a slower pace than the February surge that marked the Trump administration’s first full month back in office, according to a new report released by the Federal Reserve on April 16. The manufacturing sector grew at a 0.3 percent rate last month, down from a 1 percent gain in February, but still posted a strong 5.1 percent annualized pace in the first quarter.

The March figures, which show a 1 percent year-over-year increase in factory output, confirm continued momentum under President Donald Trump’s aggressive reindustrialization strategy. His administration has emphasized tariffs and trade policy as tools to reverse decades of industrial decline. “I think this country’s going to boom,” President Trump told reporters in March. “But as I said, I can do it the easy way or the hard way. The hard way to do it is exactly what I’m doing, but the results are going to be 20 times greater.”

The strong manufacturing data followed a February rally supported by reports from the Institute for Supply Management and S&P Global, which showed higher orders, output, and hiring. Still, March signaled a moderation, as new data from ISM and S&P Global indicated contraction in the sector by month’s end.

President Trump’s tariff policy, which includes a 10 percent baseline rate and up to 145 percent tariffs on Chinese exports, has fueled both optimism and concern. ING analysts noted that while the tariffs could reap long-term benefits, “the U.S. economy faces a very challenging and likely economically damaging transition period.”

While the tariffs aim to pressure foreign governments, reshore production, and generate revenue, they have also created near-term uncertainty. Consumer sentiment has dipped, with surveys from the University of Michigan and The Conference Board reflecting inflation and tariff-related cost concerns. Small business optimism has also slipped.

Nevertheless, broader economic indicators remained strong in March. Retail sales jumped 1.4 percent, job growth exceeded forecasts with 228,000 new positions added, and inflation cooled to 2.4 percent, its lowest in six months.

The Federal Reserve report underscores that manufacturing, which represents roughly 10 percent of U.S. GDP, has rebounded sharply after contracting in the fourth quarter of 2024. As policy shifts take hold and trade dynamics adjust, the next quarter will serve as a critical test of the Trump administration’s industrial policy.