The Texas manufacturing sector is reeling from a dramatic downturn as the Dallas Federal Reserve’s April Manufacturing Index plunged to -35.8, marking its lowest level since the COVID-19 lockdowns in May 2020. The steep decline, far worse than the forecasted -14.1 and the prior month’s -16.3, signals a severe contraction in factory activity across the state, raising alarm bells about a potential economic slowdown.
According to the latest Dallas Fed Manufacturing Survey, manufacturers are pointing to tariffs as a primary culprit behind the crisis. The survey, conducted between April 15 and 23 with responses from 87 Texas manufacturers, revealed 33 mentions of tariffs in the commentary, with one respondent lamenting, “Tariffs. Tariffs. Tariffs. There was a better way to do this.” A word cloud from the report underscores the dominance of “tariffs” alongside terms like “uncertainty,” “demand,” and “manufacturing,” painting a grim picture of the industry’s challenges.
Key metrics from the survey highlight the extent of the downturn: the new orders index plummeted to -20.0, shipments dropped to -5.5, and prices paid surged to +48.4, reflecting rising costs amid shrinking demand. The general business activity index fell 20 points, with a three-month decline of -49.9—the second-largest in the survey’s history since 2004, only surpassed during the COVID-19 crisis.
Analysts and social media reactions are linking the downturn to the Trump administration’s trade policies, particularly the 25% tariffs on steel and 10% on aluminum, which were intended to bolster U.S. manufacturing but have instead led to increased costs and economic uncertainty. X posts from industry experts like @amitisinvesting note that tariffs are causing “demand destruction,” while @TheStalwart Called the survey “pretty horrible,” adding it to a growing list of concerning economic indicators.
The Dallas Fed report also highlighted supplemental questions on tariff impacts, with manufacturers expressing fears of a looming recession and criticizing high interest rates. One respondent noted, “Tariff uncertainty and actual impact is likely to be significant for the business,” while another emphasized the difficulty in forecasting amid such volatility.
This development comes amid broader concerns about the U.S. manufacturing sector. A recent Reuters report from April 23, 2025, highlighted labor shortages in steel-heavy regions like Mississippi County, Arkansas, despite efforts to attract workers with housing incentives. Meanwhile, historical data from Econofact in 2020 showed that similar tariffs led to 75,000 fewer manufacturing jobs due to higher input costs, a trend that appears to be resurfacing.
As the debate intensifies over the viability of small manufacturing businesses in Texas, experts warn that continued trade policy uncertainty could deepen the economic fallout, potentially impacting national growth. Stay tuned for further updates as this story develops.
