Special Questions

Texas Manufacturing Outlook Survey

Data were collected February 11–19, and 87 Texas manufacturers responded to the survey.

NOTES: 86 responses. In Feb. '23, the question asked about 2023 versus 2022.

NOTE: 78 responses.

NOTES: 23 responses. This question was only posed to those answering "significant reliance" or "some reliance" in question 2.

NOTE: 86 responses.

NOTES: 22 responses. This question was only posed to those answering yes to question 3.

• The aluminum tariffs are causing an increase in the price of our packaging. We have already received notice of a price increase from a supplier. We aren't going to raise the price of our beer immediately but will have to if the tariffs persist. The potential for a tariff on all goods from Canada has created a lot of uncertainty on what the price of our malt will be. If this goes into effect, it will cause a significant increase in our costs of goods sold, which will force us to increase our prices to consumers.
• Currently no impact.

• As a large exporter, the possibility of lowering tariffs for our exported goods has a potential business upside. The situation is dynamic, and we are not sure of the outcome at this time. Challenging the tariffs is a logical thing to improve U.S. global competitiveness and export ability, leading to potential increased manufacturing jobs in the U.S.
• There is enormous uncertainty due to the unknown nature of even the direct impact without any clear idea how it will impact customer industries, competitors and suppliers.

• We will incur cost of goods increases.
• So far, the tariffs have not affected my company, but this could change because we source many of the components that we need to build our products from both Asia (Taiwan and Singapore) and Europe (Germany, France, Switzerland). U.S. trade policy uncertainty vis-à-vis Canada and the European Union could also affect our business, as we export 25–30 percent of our products to these two markets, with most of this going into the German OEM [original equipment manufacturer] industrial manufacturing market.
• There is some uncertainty about exports if a generalized tariff is imposed and broad retaliatory tariffs result. However, most retaliatory tariffs are targeted, so we don't expect much impact. Only about 10–15 percent of our sales are exported, so any sales reduction would be minimal.
• Short-term negative impact, positive long-term impact.
• Orders are stalled, but there is increased activity in shifting assembly to the U.S. by some customers. It's early and unclear if this is a pricing exercise at this point.
• We are spending money figuring out how to process tariffs. We believe costs will go up due to tariffs. Costs have to go up if the plan is to be able to produce more in the U.S., since our material and labor are generally higher than other countries.
• Tariff costs on electronic components will impact the cost to our customers in our EMS [electronic manufacturing services] business. They will reduce our margins in our OEM business. These costs will not pose a significant threat to our business. I support the use of tariffs as a balancing tool for the president.

• We are taking a wait-and-see approach.

• Tariff uncertainty is the biggest concern. Once a final direction is known, we will adjust sourcing and pricing as appropriate.
• Raw material costs will increase. Until the U.S. can produce on the level needed to match or exceed demand, costs will continue to rise.
• Materials and inventory costs are increasing.
• We are seeing a large impact on projects already on our books, and prices for steel are going up.
• It is too early to tell what the overall impact will be.
• There is a possibility of significant changes to steel prices. Tariffs increase foreign steel, and the domestic producers match the increase. This flows through the prices we offer to our customers. How this impacts demand will be up to the tolerance of our customers.
• We have several Canadian customers that are worried about the impact of tariffs.

• [There will be a] possible increase to cost of goods sold since a portion of our raw materials come from abroad.
• Tariffs will impact our raw ingredient prices. These will force us to use the domestic choice, which is more expensive, and this will push us to increase finished goods pricing.
• Yes, we will have to raise our prices.
• Import tariffs will increase raw material costs.
• Tariffs on Canada and Mexico will lead to higher raw material costs.
• We buy certain equipment from China as well as some food ingredients.
• So far, it's been stressful and time consuming for upper management. The real impact is still to be determined.

• We are seeing some proactive purchasing. It is a lot of wait and see.
• Our items coming out of China (10 percent) are seeing significant decreases in margin. The rest of our items are produced in Vietnam, where there are currently no additional tariffs.

• Steel pricing is up, and all three of our industries are heavy steel consumers. With that said, the impact has yet to be dramatic today, but I do expect greater costs as we go forward in the year.
• I suspect the cost of steel will continue to increase.
• We’ve increased our inventory to keep our prices down to current levels. However, if we find costs moving upward, we will increase our selling prices.
• Effects are not yet known.
• Not known at this time.
• So far, we have not had any significant impact, and without us even requesting a price reduction, some Chinese suppliers are reducing prices to partially counteract the increased tariff.

• There has been a dramatic impact from tariffs. We source aluminum and steel domestically; however, like in 2018 when President Trump enacted tariffs, which are still in place, domestic producers increased their pricing. Trade policy uncertainty is causing a wait-and-see posture from our customers.
• Our products have become much more expensive to import, and we haven't been able to locate U.S.-made alternatives or source production from other countries with lower tariffs for many products we sell.
• We manufacture products that have pieces that can only be made in China, because the U.S. no longer has the capability to manufacture those pieces. We anticipate higher prices on piece inputs to the manufacturing process because of tariffs.
• We purchase products from China, Mexico and Canada, so tariffs will not help me. I support the president, and I will work with tariffs in the short term if it helps the U.S.

• We utilize mostly domestic steel in our products and some foreign steel. Increased tariffs on steel imports may allow domestic producers to raise their prices as well. This will cause us to have to raise prices for finished goods.
• We will soon increase selling prices due to China tariffs.

• We will have to raise selling prices on some items because the tariffs will increase our costs.
• No impact yet, but it has affected our longer-term outlooks

• Tariffs and the threat of tariffs is very much adversely impacting our business and our entire sector. So much uncertainty.
• We import metal components primarily from China. We are just coming out of Chinese New Year and ramping up shipments. But we will soon be significantly out of space. We are a small business that cannot speculate too much. Our retail customers are wary and don't commit to longer-term usage requirements. All plans are shorter term and very suspect.

• We are concerned about the price of some raw materials that are sourced outside of the U.S.
• Current trade policy and tariffs have caused a significant decrease in new orders due to uncertainty for our products’ end users, thus resulting in a slowdown in overall demand and order activity.
• My company is a domestic manufacturer so we anticipate almost immediate benefit if tariffs are implemented. That said, planning is essentially frozen until we know the “new rules” in order to respond to any necessary tariff-driven changes.
• Section 232 tariffs help level the playing field, especially when dealing with Mexico and South America.

• I am worried it is contributing to a very soft business activity level right now. There is way too much uncertainty.
• Minimal effect on our business.

• We are worried about tariffs as most of our inventory comes from Asia. We placed large purchase orders late last year before tariffs were announced (received this month) to get ahead of any tariffs. Tariffs will impact our pricing and margins, so we are watching closely.

• Trump tariffs may cause an increase in material prices and/or a slowdown in demand later this year.
• Demand from OEM customers has contracted over the past 12 months, accompanied by statements from executives that they were waiting to see which candidate wins and what the new administrations would do. With President Trump's actions, OEM customers have declared a freeze on engineering and purchases except for what's immediately necessary. Approximately 60 percent of our products are exported. Trade policy paired with U.S. dollar strength has our international OEMs favoring low-cost options just when we were beginning to see the fruits of nearshoring/reshoring initiatives.
• Tariffs on products that are not available in the U.S. due to natural resources such as tungsten are already hurting our business. Some European companies (such as in Ireland, Finland and Sweden) are selling the same products into the U.S. without the burden of paying tariffs.
• Definite negative impact. Some of our customers produce their product in Mexico for sale into the U.S. They are very concerned about their long-term viability should the tariffs remain in place.
• No impact.
• We need to know what trade policy is going to be.
• There is a substantial potential impact of tariffs from and to Mexico and Canada, and uncertainty about tariffs on European imports. This is a sad state of geopolitical brinkmanship.

• Not at all.

These comments are from respondents’ completed surveys and have been edited for publication.

Texas Service Sector Outlook Survey

Data were collected February 11-19, and 240 Texas business executives responded to the survey.

NOTES: 236 responses. In Feb. '23, the question asked about 2023 versus 2022.

NOTE: 224 responses.

NOTES: 72 responses. This question was only posed to those answering "significant reliance" or "some reliance" to question 2.

NOTE: 235 responses.

NOTES: 36 responses. This question was only posed to those answering yes to question 3.

• Tariffs are a negotiation tool, and I suspect that they will not be in place for an extended period.
• The impact is just in the overall price to consumer goods as it moves through the supply chain.
• We very much like these new policies. As a U.S.-based company, we will be able to sell more overseas as well as within the U.S.
• Increased costs for construction materials (steel, aluminum, etc.) could depress activity, and owners could delay projects.
• Tariffs and trade policy uncertainty will likely have an impact on construction materials, which are expected to increase in price. Some companies are buying and stocking up on certain building materials just to have them on hand.
• Clients are unsure about possible cost increases.
• Unsure.
• None yet.
• Thirty percent of our business is related to storage and distribution from large warehouse facilities. At this point in time, the impact from import restrictions is unknown.
• Steel and aluminum tariffs will drive up costs for project delivery.
• They could have an adverse effect on the energy industry.
• Uncertainty may accelerate some purchases and pause others; it is hard to tell yet.
• Right now, we have seen some impact on our clients’ decisions, but not a lot. It looks like everyone knows that there will be some increases in price, but they are still getting their pro formas to work.
• Uncertainty tends to slow down the contracting process.
• The U.S. relies on trade in both directions, and current proposed trade policy tweets, if executed, will shrink the U.S. economy.
• Unknown.
• Will the European Union retaliate by adding tariffs to cloud software sales? Currently it is zero, so that would suck. Boat-rocking is a dangerous game, even in the hands of a master of brinksmanship.
• U.S. trade policy does not directly impact our services. However, our customers are impacted by the uncertainty these policy changes create, and this can lead to delays in project start dates or complete cancelation of anticipated projects.
• Not at all so far.
• They impact the market's perception of inflation, which may induce higher costs of capital. Mine is a capital-intensive business.
• As an engineering services firm, we may be indirectly impacted if our manufacturing clients are negatively impacted by U.S. trade policy.
• Tariffs may interrupt the manufacturing processes, causing uncertainty in the markets.
• There’s no direct impact on our business, but we expect a general inflationary impact.
• Tariffs are expected to be positive for our clients, many of whom manufacture in the United States. Our software development company has always been a made-in-USA firm, and an increased attention on America First will be a net positive.
• The 25 percent tariffs on steel and aluminum will increase our costs.
• Big impact.
• We are not yet seeing a change, but there is concern on both trade and immigration.
• Construction volume is highly unpredictable as projected import-export fees on concrete and steel fluctuate daily.
• We specialize in commercial real estate, so if building prices skyrocket, it will impact my business negatively.

• Minimal effect expected.
• Not sure.
• Trade policy and tariffs—and the constant barrage out of the administration—create an undue amount of uncertainty regarding inflation across the board. Add to that the immigration positions, and the prospects of inflation in Texas and the nation are heightened. This produces upward pressure on interest rates, thus increasing the deposit costs for community banks.
• Tariffs are going to keep inflation at higher levels, and this will definitely impact the real estate markets. Until we get it under control, interest will remain high as well.
• Not impacting at this time.

• We have not witnessed any changes.
• Anything increasing costs to consumers is making it more difficult for us to keep up with competitive pricing.
• Costs are steadily increasing, and we can't pass all of these on to the customer. Customers will start cutting back on meetings and events.
• As those policy changes relate to and impact our large enterprise clients, they impact us. Our large clients are holding off pn backfilling open roles and not opening new roles due to increased uncertainty and cost of producing their products. Many of the components of their products come from countries on the tariff list. The product may be made in the U.S., but the parts to produce it are made in other countries.
• Its direct effect has been electronic equipment and tooling being delayed by 40 to 60 days. There’s no reason given as to why, but it aligns with when the tariffs were announced.
• We are moving some business due to tariffs on Mexico products.
• Policy and tariffs will not directly impact our business, but we are in the business of connecting employees to employers. We are anticipating that we will see increased layoffs of government-funded positions at the same time employers who rely more heavily on in-migration, whether domestic or international, struggle to find workers. There will be a mismatch between the skill level of unemployed workers and the available jobs. At the same time, we anticipate a reduction in funding while the demand for services from both job seekers and employers will be increasing.
• The whipsaw in the financial markets is causing anxiety among our clients. We are spending a lot more time hand-holding versus going out and finding new clients.
• Tariffs will drive up prices across the board, which in all likelihood will increase inflation.
• Trade “policy” changes weekly.

• Overall, expectations are that tariffs should improve the U.S. economy to bring production of goods and services back to the U.S. as well as level the playing field for international commerce.
• We do not believe that trade policy and tariffs will materially affect our business.
• None yet.

• There is an uncertainty relative to availability of components and material related to broadband deployment.

• If Canadian tariffs are implemented, we expect to see a large increase in paper prices, which constitute by far our single largest cost outside of salaries.
• Trade policy directly impacts our customers' ability to operate profitably, and uncertainties around trade policy have created material and debilitating risk aversion among our customer base and have made them less likely to pursue new solutions or outlay additional investments. In some cases, we see onshoring as being beneficial if we can capture new customers who are shifting operations into the U.S. from other countries. However, the uncertainty has created paralysis, which has frozen our ability to manage our go-to-market strategy.
• Negatively. I have a lot of worry that the 50 percent of our sales pipeline that comes from Europe will disappear due to the administration's actions and statements.

• The uncertainty and rhetoric have caused a lot of heartburn and are causing disruption in our communities.

• Steel has already been priced at a premium for the past two years, so I do not anticipate the tariffs impacting the price significantly. It will, however, allow domestic producers to become more competitive.

• The issue has caused a great deal of uncertainty in the manufacturing community. Certain jobs will never be ideal for U.S. labor, not to mention that if the administration actually spoke with manufacturing companies and not just the large ones, they would find out that manufacturing companies cannot find the labor even if they wanted to locate the manufacturing in the U.S.
• Everyone is watching cautiously as tariffs on energy in particular could decrease some demand. However, if China buys energy from somewhere else, that's really only going to displace that supply into other regions, which the U.S. will then backfill. The market for energy is overall somewhat inelastic at the moment, so it’s really more of an exercise of moving around the deck chairs than actually losing access to demand markets.

• We are 100 percent impacted. We could be forced out of business.
• Still to be determined.

• Not at all.
• We do not expect the tariffs to have real impact. They may impact the need for additional storage space by our customers.

• None.
• Increased input costs and expenses will hurt margins and profits and lead to price increases.
• Commodities from Mexico are being scrutinized for additional suppliers.
• None yet.
• Our packaging costs will rise, payroll will increase, and food cost will rise. I am not certain we will be able to pass on the costs to our customers.
• We anticipate a higher cost of goods sold for imported goods. It is uncertain whether we will adjust prices or absorb them. We are likely to switch from some imported goods to American made if possible.
• As of this writing, we've seen no measurable and clearly correlated impact to our business. That said, it would not be a surprise over the next year, as import items such as coffee very clearly could be increased or negatively impacted.

• This is definitely a concern, but it is unclear what exactly will change from the previous administration. So far we’ve seen a lot of smoke, but I can’t say I see the difference yet.
• Any tariffs that make their way to the consumer and reduce expendable income will reflect on our business in less travel and purchases.

• We do not anticipate any change.

• Thus far they are not impacting us. However, as some medical supply production has been offshored in the past, when and if tariffs get set in place, our costs will go up.
• Not much at all.
• Most of our fresh produce comes from Mexico through the port of Nogales. A 25 percent tariff on food will have an immediate negative impact on our organization.

• Anticipation of higher prices may impact our purchasing practices and decisions.

• No direct influence.
• Trade policy and tariffs will impact our customers and in turn affect us.
• The tariff will eventually increase operation expenses.
• No impact.
• There has been very little measurable impact up to this point. There continues to be a delay in businesses that need to order parts. Business partners anticipate an increase in the cost of some goods and continued delays in delivery.
• There’s no current impact, but we would anticipate construction material prices to increase in the event significant tariffs are assessed.

• Tariffs are increasing our prices.
• A possible impact is slowing clients’ capital spending due to the cost of steel (casing) and other inputs. Also, we anticipate some moderate impact to sustainability projects while administration measures are assessed.
• We have concerns about an inflation impact, especially if we keep targeting our friendly neighbors.
• Tariffs drive up the cost of building materials, and the higher cost of construction will curtail new investment. Higher interest rates reduce the value of existing assets, and we expect this to continue or accelerate in 2025. This is partially offset by pent-up demand from capital, but we expect overall activity to remain muted.
• I am trying to sell a Texas business that sources all products from China. The uncertainty has stalled the process, and potential buyers are ending discussions in most cases because of this, at least until the smoke clears.
• It’s creating some uncertainty for customers.

• It doesn't directly impact us, but it's hammering our suppliers. We preordered massive amounts of equipment in December 2024 to hedge against these tariff risks.
• So far, we have not seen the impact. Much of our equipment comes from Japan and Europe. I do not know what the tariff threats are for those countries.

• They have not impacted our business yet, but with increased capital expenditures for the next month and six months, we do expect to be impacted.
• We do not know if there will be an impact just yet. Maybe on building supplies for building new homes.
• Tariffs will increase our cost to do business. Especially tariffs on steel.
• Stable. Some exposure to building materials.
• We expect tariffs to negatively impact those who live paycheck to paycheck. This is most of our employees and apartment dwellers. This will increase delinquency and limit our ability to increase rents.
• The impact is only for builders. Prices for building costs may increase on imported products for building new homes.
• It is not clear to what extent Chinese tariffs may affect hard costs of construction.
• To the extent tariffs are inflationary, that will be a headwind to our business.
• It’s not affecting us.

• It impacts construction supplies.
• Indirectly, if any, depending on whether customers lose business from supply-chain disruptions.
• Uncertainty in the market has slowed business.

• Price increases due to tariffs have been minimal so far, but more may be on the way. Since we are a publishing house, we are particularly vulnerable to fluctuations in paper prices. We're waiting to see what happens in the short term.
• We provide services to our clients who are manufacturing, produce and construction companies. The lack of a coherent tariff strategy—along with inconsistent and contradictory communications from the new administration—is causing them to freeze all plans for capital expenditures expansion and new site startups until some clarity is seen in a long-term U.S. strategy. The new administration in Mexico is another wild card impacting many of our client companies. The continued claims that foreign countries pay the tariffs, instead of the reality that U.S. companies pay 100 percent of all tariffs on imports, is also undermining support for the new administration. Our concern is that in an environment where there is uncertainty, businesses cut back immediately on spending and costs, which impacts our business revenue as a service organization to the industry.

These comments are from respondents’ completed surveys and have been edited for publication.

Texas Retail Outlook Survey

Data were collected February 11-19, and 42 Texas retailers responded to the survey.

NOTES: 42 responses. In Feb. '23, the question asked about 2023 versus 2022.

NOTE: 38 responses.

NOTES: 11 responses. This question was only posed to those answering "significant reliance" or "some reliance" to question 2.

NOTE: 41 responses.

NOTES: 5 responses. This question was only posed to those answering yes to question 3.

• We utilize a Canada-based contract manufacturer for 20-plus percent of our production and resulting sales. Our category is competitively priced.  If we see a pricing increase due to tariffs, our business and revenue will suffer tremendously.
• It is a destabilizing and inflationary force.
• Prior to President Trump taking office in late January, he was positioning tariffs for immediate implementation. Now that he has come into office and implemented them, it has become somewhat apparent that tariffs are being used as a hammer to gain concessions in unrelated negotiations. For example, he used the threat of tariffs to gain some concessions from Colombia regarding immigration and repatriation without implementing the tariffs. I think it will take another three to six months for some of the threats to work their way to an intended conclusion. Some of the tariffs might stick, some might not. All in all, I don't think the tariff talk is necessarily bad, but I think the implementation is very clumsy.

• It is impacting new prospects making buying decisions.
• This made us fire 80 percent of the workforce in the first Trump mandate. Now we are at risk of closing the corporation due to our headquarters being in Taiwan and our factory in China.
• Increasing the cost of steel and aluminum will make it harder for our customers to compete.
• Tariffs shouldn't impact us.
• Tariffs will impact the input prices of many of our products. These increases will force us to increase our selling prices; look for comparable products coming from nontariff countries; and look at the small amount we import from tariff countries and search for alternative manufacturing sources.

• I wish I knew. This definitely will impact our business. The impact could be devastating in the near term but great long term. President Trump must carefully listen to leaders in various industries prior to quickly enacting changes that will financially disrupt and bankrupt iconic U S. companies that have been the backbone of America. The timing and pace will be important.
• Tariffs would have a significant impact on our sister business which, in turn, will impact our business. Our customers would most likely see increases in the prices that they are paying, as the company cannot absorb the full impact of proposed tariffs of any sort.
• Should tariffs apply to automobiles, it could dramatically change our outlook.
• If tariffs on imported vehicles increase, we will be significantly impacted.
• Tariffs impact every part of my business, vehicles and vehicle parts.
• Could increase our costs and prices we charge.
• Tariffs could have a major impact on the cost of new vehicles to consumers, but I believe some portion of the cost increase would be absorbed by manufacturers. Increases in new vehicle prices would also raise the value of preowned vehicles. None of this is good for consumers struggling to afford new vehicles.
• Not at all.
• Tariffs would impact the automobile business drastically. Affordability is already a problem for consumers. Any tariff on top of the problems that inflation created would be a huge negative to our business.
• Our vendors are already talking about implementing tariff surcharges. Once we see these, there will be a direct pass-through to our customers. We believe it will reduce sales of new machines and could also increase the value of clean used inventory, driving that market up.

• Trade policy specifically on oil and gas from Canada (if put into place) will put pressure on midcontinent refiners and could result in tighter supply. The policy could have similar results in the New England region, as a big portion of that supply is from Canada. There is a waterfall effect due to the steel and aluminum tariffs that could impact the trucking industry (not sure yet if that will be good or bad for the fuel business, as it will not be a direct impact).

• We are starting to see increases in forest products. We have a potential increase in steel panels from Canada.

• It most likely will cause significant slowdowns in the new residential construction industry.
• They have not directly affected us, but some of the manufacturers in our segment have announced price increases.
• A lot of the models and product lines are manufactured in Asia. Who knows, as those items are already much higher now at retail. Things like freezers, microwaves, vent hoods, some dishwashers, front-load washers and full-size refrigerators [could be affected].

• We import all our materials from the European Union.

• Tariffs should not impact my business since most raw goods used are U.S.-manufactured.

• No effect at the moment.
• No current impact. However, we are concerned about possible overseas shipping delays and increased costs.

• Not seeing anything as of now.

• We don't see a large direct impact on our business. Maybe slight increases in prices. But I am concerned about the indirect impact on our business, such as a downturn in the overall economy and a drop in the stock market.

These comments are from respondents’ completed surveys and have been edited for publication.

Special Questions Comments

These comments have been edited for publication.

• Cutting federal spending is very important to this country and the economy.
• Some of our shipments are to the prepaid wireless market, and that demand is dropping.
• Political uncertainty in the European Union is still causing problems with our business; hopefully, the new election in Germany will help alleviate some of this uncertainty.

• We've hired more immigrants over the last 20 years due to the lack of skilled labor. The immigrants are more open to learning and working hard. We have to train our own. Our workforce went from 90 percent white/10 percent Hispanic or Black to the complete opposite over the last 20 years.

• We understand the problems with trade policies and tariffs and that it will be disruptively painful during the correcting phase, but the goal is fair trade. We need to make sure we are ensuring that all companies and especially overseas firms are properly classifying commodities and declaring the real values of their goods.

• As a free trader, I believe the tariffs will have a mixed impact in the short run depending on the specific category of business of a company. In the long run, there is no doubt it will be a bad outcome for our country. The concept of beggaring our neighbors—Canada and Mexico—is terribly wrong-minded policy.

• We really need energy expansion to take shape to change the economic picture.