Tariffs, Trade Policy, and Sector Growth Reshape the Forecast
The U.S. manufacturing outlook just got brighter. During AMT’s Summer Economic Update Webinar, Oxford Economics revised its 2025 machine tool forecast from a projected 7.2% decline to an expected 2.9% growth. The upgrade reflects clearer trade policy, resilient demand, and strong first-half performance.
A Strong First Half — But Cooling Ahead
The first half of 2025 saw double-digit order increases, largely driven by front-loaded capital expenditures ahead of tariffs announced earlier this year. Oxford warns this surge will likely cool in the second half as demand adjusts, creating margin pressures as input costs rise faster than output prices.
Looking further ahead, Oxford forecasts MT orders will see a 4.3% decline in 2026, followed by a sharp 12.7% rebound in 2027 as financing conditions improve and sectors like aerospace – especially space, missile, and defense – accelerate investment.
Tariffs and Trade Policy: The Wild Cards
Tariffs remain a key factor shaping the market. Effective rates have jumped to about 17%, up from low single digits before January 2025. While the risk is real, Oxford says the outlook is better than it was in May, with a best-case scenario around 15% and a worst-case scenario near 30% (though the latter is considered unlikely). Rising tariffs, thinning inventories, and a weakening dollar are expected to cause price shocks that manufacturers will feel in the coming months.
Reasons for Optimism
Offsetting some of these headwinds are fiscal measures such as AI and digital economy investments, the One Big Beautiful Bill (OBBB), and a reduced tax burden – all of which are spurring factory investment, R&D, and profitability. Growth in data centers and digital infrastructure is also expected to boost manufacturing demand.
Where To Go for the Full Picture
Oxford Economics will deliver an updated forecast at AMT’s 2025 MTForecast on Oct. 15-17 in Schaumburg, Illinois. The conference will go deeper into these projections, explore key customer industries such as aerospace, automotive, energy, and machine shops, and provide insight into monetary policy shifts. Daniel Sullivan, executive vice president at the Federal Reserve, will offer a unique perspective on the manufacturing economy.
MTForecast moves beyond the headlines to give manufacturers the context and data they need to plan with confidence. Attendees can expect actionable intelligence to improve business plans and marketing and sales strategies. Spots are limited and filling quickly – reserve yours now to gain economic insights, market trends, and expert perspectives that can help you navigate 2025 and position your business for long-term success.
