Uncertainty Around Tariffs Reshaping Equipment Manufacturing: Report

Uncertainty around industrial tariffs has made it more difficult for equipment manufacturers to focus on long term strategy. That's according to a new study by Oliver Wyman and the Association of Equipment Manufacturers, the 2025 State of Industrial Goods North America Non-Road Equipment, which found that 51% of industrial goods companies are dedicated to short term initiatives of less than one year.

Equipment companies also reported falling sentiment, especially farm equipment manufacturers, whose clients have been hit by agricultural tariffs. The authors of the report noted that agricultural equipment revenue in the United states has declined by 3.4% in the past five years, including a sudden drop in 2022 and 2023 and only slow growth since. In general, equipment manufacturers reported an average sentiment of 5.7 out of ten, compared to 8.0 in 2024, due to tariff uncertainty, inflation and high interest rates.

Those difficulties, especially tariff uncertainty, are leading equipment manufacturers to plan on the short term. The report found 68% of companies reporting “significant setbacks with long-term planning” due to changing tariffs. A quote in the survey from an unnamed propulsion systems supplier emphasized the unpredictability of the tariffs over the import taxes themselves.

“The problem isn’t tariffs, it’s that they change too fast to plan around,” the supplier said.

The study authors found “trade policies and geopolitical stability” were the top-cited force affecting competitiveness for equipment suppliers reached by the survey and directly interviewed by report authors: 56% of those surveyed and 86% of executives interviewed cited it as a concern, more than any other concern. Interviewed executives rated “talent management” as the second-most concerning item, while those reached by survey were more likely to pick “operations and supply chain.”

Despite the fallen sentiment and uncertainty, a majority of leaders are optimistic about their companies’ capability to adapt, with 70% reporting confidence in this area.

According to Michael Sharov, partner in Oliver Wyman’s Transportation and Advanced Industrials practice, the report reflects industrial manufacturers positioning themselves for resilience, despite their reported short-term focus.

“Companies are embracing short-term initiatives, driving workforce development and aftermarket services, while investing in innovation, digital tools, and new distribution models to navigate today’s challenges and position themselves for growth. This approach attests to the industry’s resilience and dedication to long-term growth in a changing landscape,” Sharov said.

Association of Equipment Manufacturers Megan Tanel said the report reflects the equipment industry’s “determination.”

“Behind every data point in this report is a manufacturer working hard to deliver the equipment that builds, feeds, and powers North America,” Tanel said. “By embracing innovation, supporting our workforce, and advocating for the right policy environment, equipment manufacturers are positioning themselves for long-term growth and leadership in a rapidly changing global market.”