Why Apple and Ford Manufacturers Dropped Production in March

US manufacturing faces mounting pressures as Middle East conflict disrupts supply chains while tariff costs continue to escalate across multiple sectors.

Federal Reserve data showed US industrial production contracted 0.5% in March 2026. Manufacturing output declined 0.1% in the same period.

The decline comes as manufacturers face supply chain disruptions from the Middle East conflict. Raw material shortages and energy supply concerns have compounded existing tariff-related pressures.

According to the Federal Reserve's April 2026 Beige Book, manufacturers reported particular concerns about rising costs for steel, plastics and electronics. Some described fuel costs as "skyrocketing" due to the Middle East situation.

The dual pressures of geopolitical instability and trade policy have created significant challenges for US manufacturers. Many firms report difficulty in forecasting costs and planning production schedules amid ongoing uncertainty.

Middle East conflict disrupts materials flow

The Federal Reserve's Beige Book found that the conflict in the Middle East resulted in shortages of raw materials and energy. Manufacturers reported ongoing concerns around tariffs alongside these supply chain challenges.

The closure and ongoing uncertainty surrounding the passage of ships through the Strait of Hormuz has created bottlenecks. According to the International Energy Agency (IEA), the strait accounted for nearly 34% of global crude oil trade in 2025.

Some manufacturers depend on the Strait of Hormuz for critical raw materials beyond oil. Helium needed for semiconductor manufacturing passes through the strait.

Aluminium required for automotive manufacturing also transits this route. The supply chain disruptions have led to price increases across multiple materials categories.

Shipping delays have extended lead times for critical components. Some manufacturers report waiting weeks longer than normal for materials that previously arrived on predictable schedules.

The uncertainty has forced some firms to increase inventory levels despite higher carrying costs. This strategy aims to buffer against potential future disruptions to supply chains.

Manufacturing output contracts across sectors

According to the Federal Reserve, durable goods production decreased 0.2% in March. Motor vehicles and parts output fell 3.7% in the period.

Primary metals, machinery, furniture and related products also posted declines. Nondurable manufacturing output edged down 0.1%.

More industry groups posted losses than gains in March, according to data from the Federal Reserve. Materials costs continued to rise, particularly for metals like copper, steel and aluminium.

Manufacturers cited tariffs as cost drivers for these materials. Some US manufacturers reported uncertainty surrounding tariffs and the Middle East conflict as their firm's greatest challenge.

Tariff costs compound supply pressures

US President Donald Trump has imposed tariffs on imported goods since coming to power. These measures impact the cost of importing raw materials needed for manufacturing.

They also affect the cost of importing goods manufactured offshore for sale in the US. Ford says in its 2025 Earnings Call that it took a roughly US$900m to US$1bn hit as a result of tariffs in 2025.

Ford Chief Executive Officer Jim Farley says: "That's a US$1bn higher tariff impact than we communicated just in October due to the unexpected and late year change in tariff credits for auto parts."

According to CNBC, Apple has paid roughly US$3.3bn in tariffs since they were initiated. The technology sector has faced particular pressure from tariff costs on imported components.

A February 2026 report from JPMorgan Chase found that monthly tariff payments by midsize firms tripled since early 2025. The combination of tariff costs and supply chain disruptions from the Middle East conflict has created dual pressures on manufacturers.

Some manufacturers reported particularly sharp increases in the cost of steel, plastics and electronics. Energy costs related to the conflict in the Middle East have escalated for some firms.

The compounding effect of these pressures has squeezed profit margins across the manufacturing sector. Some firms report difficulty passing increased costs to customers in competitive markets.