Manufacturers in US brace for a supply shock

Firms face limited alternatives as tariffs increased on capital goods from China

Manufacturers and companies across the United States — who collectively spend billions of dollars every year importing durable, production-critical machinery from China — could soon face higher prices that would affect their operating margins and stifle future investments, experts warn.

"Given the trade and supply chain structure of the US economy, the tariffs will largely be imposed on equipment and inputs," said Tom Fullerton, an economist and professor at The University of Texas at El Paso.

"Unfortunately, that will damage operating margins for many businesses, increase the risk of a business cycle downturn and raise inflation."