U.S. Tariffs Depress Global Manufacturing Despite New Trade Deals

Global manufacturing struggled in October 2025 as import duties and weak demand from the United States depressed factory orders. Donald Trump oversaw an eighth consecutive month of contraction in U.S. factories and presided over a seven-month decline in Chinese factory activity, where shipments to the U.S. plummeted 27% year-on-year in September. To de-escalate tensions during a visit to Asia, Trump and Chinese President Xi Jinping agreed to a one-year delay in reciprocal tariffs, while South Korea secured a deal for lower duties on its goods.

Despite global headwinds, several Asian economies expanded. India led global rankings with a manufacturing PMI of 59.2, driven by GST relief, festive demand, and productivity gains, although international sales grew at their slowest rate in 10 months due to U.S. levies on Indian goods and Russian oil purchases. Vietnam and Thailand also saw significant growth, with Thailand reaching its highest growth rate in 29 months and Vietnam seeing its strongest expansion since July 2024. This trend was attributed to a tariff advantage over China and robust domestic demand.

Other regions remained stagnant or declined. Eurozone activity flattened, with Germany reporting plummeting engineering orders. In Britain, a production restart at Jaguar Land Rover after a cyberattack created a one-off bounce in activity. Meanwhile, the Government of China is evaluating fresh stimulus measures to maintain its 2025 growth target of approximately 5% amid the ongoing contraction.