TARIFFS BITE: NORTH AMERICAN AND ASIAN MANUFACTURERS RETRENCH IN APRIL, WITH GLOBAL MATERIAL PURCHASES DOWN AT ACCELERATED PACE: GEP GLOBAL SUPPLY CHAIN VOLATILITY INDEX

Rhea-AI Summary

The GEP Global Supply Chain Volatility Index reveals a significant downturn in global manufacturing activity for April 2025, with manufacturers reducing input purchases at the fastest rate this year. North American manufacturers are actively stockpiling and reducing purchases in response to tariff concerns, while Asian manufacturing hubs recorded their weakest purchasing activity since December 2023. The impact is particularly evident in China, Taiwan, and South Korea.

In contrast, Europe shows signs of recovery from its industrial recession, with improved activity in Germany and France. However, the UK continues to struggle, showing the worst manufacturing weakness in nearly 20 years. The index, based on a monthly survey of 27,000 businesses, suggests a likely production slowdown in the near future due to tariff impacts.

Positive

• European industrial downturn showing signs of recovery, particularly in Germany and France
• Supply chain capacity utilization in Europe at highest level in 10 months

Negative

• Sharpest drop in global manufacturers' input purchases in 2025
• North American manufacturers reducing purchases and increasing stockpiling due to tariff concerns
• Asian manufacturing activity at its weakest since December 2023
• UK manufacturing showing worst performance in nearly 20 years
• Signs of anticipated slower demand and supply shortages emerging globally

Insights

Global Supply Chain Economist

Tariffs are significantly disrupting global manufacturing, causing North American stockpiling and Asian contraction, while Europe shows recovery signs.

The GEP Global Supply Chain Volatility Index reveals a concerning acceleration in global manufacturing contraction, with April showing the sharpest reduction in input purchasing of 2025. This represents a significant negative shift in manufacturing activity driven directly by tariff impacts.

North American manufacturers are implementing a two-pronged defensive strategy: reducing new purchases while simultaneously building safety stock buffers from earlier Q1 purchases. This stockpiling behavior is a classic response to trade uncertainty, as companies front-load inventory ahead of expected price increases and potential supply disruptions.

Particularly troubling is the situation across Asian manufacturing hubs, where spare capacity has risen significantly—indicating factories are operating well below optimal levels. China, Taiwan, and South Korea are experiencing notable slowdowns, which will likely ripple through global supply chains given their critical role in component manufacturing.

The only bright spot appears in Europe, where data suggests the region's prolonged industrial recession may finally be abating. Germany and France are showing growth signals, though the UK continues to display significant manufacturing weakness. However, European gains could quickly reverse if global trade conditions deteriorate further.

This data strongly suggests we're seeing just the beginning impacts of tariff implementation. The combination of reduced purchasing activity and aggressive inventory building indicates manufacturers are preparing for a difficult period ahead with expected demand contractions and potential supply disruptions. The sharp reduction in April—described as the steepest of 2025—points to a manufacturing sector rapidly adjusting to new trade realities.

• The steep fall in global manufacturers' purchases signals a likely production slowdown in the near future
• North America factories respond to tariffs by buying less inputs and aggressively stockpiling
• Purchasing activity by Asian manufacturers at its weakest since Dec. 2023 as demand slumps across the region's key exporting hubs
• Bright spot: Europe's industrial recession is finally coming to an end as spare capacity shrinks further

CLARK, N.J., May 13, 2025 /PRNewswire/ -- GEP Global Supply Chain Volatility Index — a leading indicator tracking demand conditions, shortages, transportation costs, inventories, and backlogs based on a monthly survey of 27,000 businesses — indicated an accelerated reduction in global manufacturers' demand for inputs (raw materials, components and commodities) in April, signaling a broad-based contraction in purchasing activity by region.

April's drop in buying across global manufacturers was the sharpest of 2025 to date—specifically in North America and to a lesser extent Asia—as manufacturers scale back in anticipation of weakening future demand as a direct result of tariffs.

"The first blows of the tariff war have landed on global manufacturers. Stockpiling is accelerating at a concerning rate and the first signs of manufacturers anticipating slower demand and supply shortages have emerged." said John Piatek, vice president, consulting GEP.

REGIONAL SUPPLY CHAIN VOLATILITY:

NORTH AMERICAN MANUFACTURERS RAISE SAFETY STOCK TO BLUNT TARIFFS NEAR-TERM IMPACT

North American manufacturers sharply increased inventory buffers in April, warehousing front-loaded Q1 purchases in response to rising tariff concerns and a renewed focus on supply chain resilience.

SPARE CAPACITY RISES ACROSS ASIA

Spare capacity across Asian supply chains increased significantly in April as factory slowdowns were evident in many of the region's major markets, led by China, Taiwan and South Korea.

In Europe, there were further signs that the continent's industrial downturn was cooling. Supply chain capacity went underutilized to the smallest degree in ten months, reflecting growth in Germany and France, though risks remain if global trade conditions worsen.

The U.K. once again recorded significant manufacturing weakness, with supplier activity down at a rate which has rarely been surpassed in 20 years of data availability.

Interpreting the data:
Index > 0, supply chain capacity is being stretched. The further above 0, the more stretched supply chains are.
Index < 0, supply chain capacity is being underutilized. The further below 0, the more underutilized supply chains are.

For more information, visit www.gep.com/volatility.

Note: Full historical data dating back to January 2005 is available for subscription. Please contact economics@spglobal.com.

The next release of the GEP Global Supply Chain Volatility Index will be 8 a.m. ET, Jun. 11, 2025.

About the GEP Global Supply Chain Volatility Index

The GEP Global Supply Chain Volatility Index is produced by S&P Global and GEP. It is derived from S&P Global's PMI® surveys, sent to companies in over 40 countries, totaling around 27,000 companies. The headline figure is a weighted sum of six sub-indices derived from PMI data, PMI Comments Trackers and PMI Commodity Price & Supply Indicators compiled by S&P Global.

• A value above 0 indicates that supply chain capacity is being stretched and supply chain volatility is increasing. The further above 0, the greater the extent to which capacity is being stretched.
• A value below 0 indicates that supply chain capacity is being underutilized, reducing supply chain volatility. The further below 0, the greater the extent to which capacity is being underutilized.

A Supply Chain Volatility Index is also published at a regional level for Europe, Asia, North America and the U.K. For more information about the methodology, click here.

About GEP

GEP® delivers AI-powered procurement and supply chain solutions that help global enterprises become more agile and resilient, operate more efficiently and effectively, gain competitive advantage, boost profitability and increase shareholder value. Headquartered in Clark, New Jersey, GEP has offices and operations centers across Europe, Asia, Africa and the Americas. To learn more, visit www.gep.com.

About S&P Global

S&P Global (NYSE: SPGI) S&P Global provides essential intelligence. We enable governments, businesses and individuals with the right data, expertise and connected technology so that they can make decisions with conviction.

Media Contacts
Derek Creevey		Email:
Director, Public Relations	Joe Hayes	joe.hayes@spglobal.com
GEP	Principal Economist
Phone: +1 646-276-4579	S&P Global Market Intelligence
Email: derek.creevey@gep.com	Phone: +44-1344-328-099

 

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SOURCE GEP

FAQ

What does the GEP Global Supply Chain Volatility Index show for April 2025?

The index shows an accelerated reduction in global manufacturers' demand for inputs, with the sharpest drop in buying activity of 2025, particularly in North America and Asia, as manufacturers scale back due to tariff concerns.

How are North American manufacturers responding to the tariff situation?

North American manufacturers are sharply increasing inventory buffers and reducing purchases, warehousing front-loaded Q1 purchases in response to rising tariff concerns and focusing on supply chain resilience.

What is the current state of Asian manufacturing according to the index?

Asian manufacturing is at its weakest since December 2023, with significant increases in spare capacity across major markets including China, Taiwan, and South Korea.

How is European manufacturing performing compared to other regions?

Europe is showing signs of recovery from its industrial downturn, with supply chain capacity utilization at its highest in ten months, driven by growth in Germany and France, though the UK continues to show significant weakness.

What does a negative reading in the GEP Global Supply Chain Volatility Index indicate?

A negative reading indicates that supply chain capacity is being underutilized, with lower values suggesting greater underutilization of supply chains.