US manufacturers are stocking up on imports ahead of tariffs

Buying activity among North American manufacturers, measured in a survey of 27,000 businesses worldwide by GEP and S&P Market Intelligence, in November hit its highest level in more than a year.

U.S. industrial manufacturers and consumer-packaged-goods companies are buying up critical parts and raw materials, such as emulsifiers and flavor enhancers, driving up demand, according to GEP, a supply-chain software company that gathers the data.

“We are seeing a massive pull forward," said Inna Kuznetsova, chief executive of ToolsGroup, a supply-chain planning and optimization company. “We are seeing much more demand for the software that allows people to run scenarios both for the short term and for the long term to assess what they can do."

U.S. businesses are giving priority to the purchase of their most critical components before tariffs hit, said John Piatek, a vice president of consulting at GEP who works with global manufacturing, consumer-goods and biotechnology companies. Piatek said manufacturers’ main concern is that if they wait, competitors will secure the items at lower cost and the companies will be forced to raise prices before competitors do.

“They are acting now to secure critical items," her said, and “taking a wait-and-see approach for the rest."

Trump has vowed to impose new rounds of tariffs soon after taking office on Jan. 20. He has suggested tariffs of 25% on all imports from Mexico and Canada, and tariffs of up to 60% or more on certain goods from China. GEP said its clients are focused on pulling forward China imports.

Mark Boone, owner of Markus Group, a Raleigh, N.C.-based contract manufacturer, is doubling his China orders of fiber-optic cable splitters used in the technology and telecommunications sectors.

“I’m just concerned that if I have to raise my costs by 60%, then my customers may go looking for some other manufacturer to do it," Boone said.

He said the orders should carry him for about four months, by which time he hopes Trump will have reduced or repealed the tariffs as part of a trade deal with China.

The president-elect imposed sweeping tariffs on Chinese products in his first term. The levies pushed companies to seek out suppliers from other parts of Asia as well as countries such as Mexico, which last year became the U.S.’s biggest trading partner. Biden kept the China tariffs in place and added further levies on products such as solar panels.

Retailers and manufacturers say China is such a reliable and efficient supplier of parts and finished goods that it is hard to pull away completely. Instead, companies are seeking out new suppliers in one or more additional countries to mitigate the risk of additional tariffs or other geopolitical shocks.

The shifts in supply chains are throwing up new challenges for importers as they navigate new markets that sometimes lack good road, rail or port infrastructure. Importers must also vet suppliers and sub-suppliers to make sure they don’t violate increasingly stringent U.S. rules on issues such as forced labor.

Some retailers and manufacturers looking to mitigate the risk of a fresh round of Trump administration tariffs are placing orders as quickly as possible because it can take months for products to arrive from factories in Asia. The National Retail Federation recently raised its forecasts for U.S. imports, predicting a surge in container shipping activity through the spring.

“We know that it’s going to happen," said Jason Miller, a professor of supply-chain management at Michigan State University. “Because we saw it happen the last two times."

Miller pointed to the two most recent quarters that saw the highest volume of container imports from China—the final quarter of 2018 and the third quarter of 2024—noting that both periods coincided with the implementation of China tariffs under the Trump and Biden administrations.

Miller said the manufacturing components most likely to see a pull forward in the coming months include auto parts, electrical components and fabricated metal products.

Write to Paul Berger at paul.berger@wsj.com