U.S. Manufacturers Boost Capex Expectations, but Tariffs Remain a Business Challenge

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Written by Danny Levin, Deputy Editor for Industrial Info Resources (Sugar Land, Texas)

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Summary

Although U.S. manufacturers expect to increase capital spending over the next 12 months, tariffs continue to have a negative impact on their business operations.

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U.S. Manufacturers Expect More Capital Spending in 2026

U.S. manufacturers' capital-spending expectations are up from last quarter, according to a quarterly survey by the National Association of Manufacturers (NAM), but respondents continue to indicate tariffs are impacting their operations.

The NAM survey ran from November 13 to December 4 and received 241 responses, featuring small (those with 49 or less employees), medium-sized (between 50 and 499 employees) and large manufacturers (500 or more employees).

According to the summary of findings, released Wednesday, respondents anticipate an increase of 1.4% in capital spending over the next 12 months--compared with 1.0%, 0.9%, 0.3% and 1.2% in the four previous quarters, respectively. Overall, 37.3% expect additional capital spending in the next year--up from 36.1% last quarter--with 46% predicting no change and 16.7% expecting reduced capital expenditures. The latter two indicators also improved month-over-month.

Large firms predict the greatest level of investment, with an estimated 7.9% in growth over the next 12 months.

In addition, roughly 70% of respondents reported a positive outlook for their companies, up from 65% last quarter.

However, regarding longer-term investment, 82.3% of respondents agreed it was important to their company that Congress pass a bill to "maintain robust, multi-year infrastructure investment." Only 7.3% said it was not important. The summary of findings did not offer any other details, such as specific provisions or a particular timeline.

There's certainly a flip side to any positivity: tariffs continue to have a major impact on manufacturers' operations.

Tariffs Hurt Manufacturing Businesses of All Sizes

Just like last quarter, trade uncertainties (e.g. actual or proposed tariffs, trade negotiations uncertainty) remained the respondents' top business challenge (73.1% compared with 78.2% last quarter).

By business size, 85.4% of large manufacturers cited them as their top business challenge, followed by rising health care/insurance costs (70.2%) and a weaker domestic economy and sales to U.S. customers (60.9%).

A majority of all respondents (80.3%) reported paying tariffs on imported manufacturing inputs since the start of 2025; 58.6% paid Section 232 tariffs, 52.1% paid reciprocal tariffs on other countries under the International Emergency Economic Powers Act (IEEPA) and 50.0% paid Section 301 tariffs on China.

Nearly all respondents from large manufacturers paid tariffs on inputs this year.

The U.S. Supreme Court is currently considering a decision in a lawsuit filed by plaintiffs that include medium- and-small-sized businesses over whether the president can legally impose tariffs under the International Economic Emergency Powers Act. Oral arguments took place in November, and U.S. Treasury Secretary Scott Bessent said in an interview broadcast on Fox Business that he expects a ruling in January.

For more information, see November 6, 2025, article - The $90 Billion Question: Supreme Court Hears Oral Arguments in Trump Tariffs Case.

IIR's Project Data Still Shows Robust Manufacturing Project Activity

Still, Industrial Info's data indicates strong related project spending. Industrial Info is tracking more than $500 billion worth of U.S. Industrial Manufacturing Industry projects under construction, with the data center sector accounting for about one-third of the total investment value.

Data centers are one of, if not the, fastest growing industrial sectors across the country, with the buildout coming from tech giants and private developers alike. Virginia currently has the largest share of U.S. data center capacity, and Texas continues to grow its share of the market.

Amazon Web Services (AWS) is building out a new, four-building data center campus (IAD-80) in Virginia. Construction of the first building kicked off in late 2024, with completion expected in February, while the three subsequent buildings could wrap up by the end of 2028.

Subscribers to Industrial Info's Global Market Intelligence (GMI) Industrial Manufacturing Project Database can read the project reports.

Also underway is the construction of a massive, seven-building data center campus ("Goodnight") in Claude, Texas, being developed by artificial intelligence (AI) infrastructure company Crusoe Energy Systems (Denver, Colorado). The project has an estimated capacity of more than 1 gigawatt upon full completion. Subscribers can read a full list of detailed project reports.

For more information on the state of U.S. data center development, see December 8, 2025, article - U.S. Data Center Buildout Hits Obstacles--Speed Bumps or an Iceberg?.

Subscribers can access a full list of U.S. Industrial Manufacturing Industry projects that are under construction.

Key Takeaways

• U.S. manufacturers increased their capital-spending expectations for the next 12 months.
• However, tariffs continue to pose a threat to their business operations.
• Industrial Info is tracking more than $500 billion worth of Industrial Manufacturing Industry projects under construction across the U.S.

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About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).