Pandemic flashback: Manufacturers can't get supplies

The big picture: Factories are reporting increasingly longer delivery times for supplies. Material prices are rising at a faster rate. Automakers are warning of supply disruptions shutting down assembly lines, with at least one carmaker pausing production.

• This time, there is no deadly virus, though trade wars and tariffs are still sending shockwaves through global supply chains, which could leave consumers with fewer options on shelves.

What they're saying: "The administration's tariffs alone have created supply chain disruptions rivaling that of COVID-19," an electric equipment manufacturer told the Institute for Supply Management in the group's most recent sector survey.

State of play: Supplier delivery times are the slowest in two years, that survey showed — a result of companies slowing or canceling shipments in the wake of on-again, off-again tariffs.

• Suppliers are also struggling to keep up with manufacturers' accelerated requests to get goods into the country before tariffs take effect.
• It is taking longer for customs to clear shipments newly subject to tariffs.
• The process is further bogged down by companies "haggling" over who should pay the tariff bill, ISM said.

The intrigue: This is an economic data anomaly. Supplier delays typically happen when manufacturers are racing to keep up with consumer demand, like 2021.

• But manufacturers are seeing new orders dry up at the fastest pace since the pandemic: "It is not normal that you have weak demand conditions, yet lead times are getting longer," Jason Miller, a supply chain management professor at Michigan State University, tells Axios.

Tariff disruptions linger

Threat level: The longer the disruptions last, the longer it takes to undo — even if tariffs vanish.

• "If the President wakes up tomorrow and says 'this is over,' you would see a huge boom and delivery times would get longer," Miller says. "That would be like throwing gasoline on fire."
• "It takes time for supply chains to get knotted up, but once it gets knotted, it takes a long time to get rectified," Miller said.

Between the lines: Delivery times are below the peak seen in 2021, the height of the COVID-induced supply chain bottleneck, though auto manufacturers are sounding the alarm over shortages that threaten the type of plant closures last seen during the pandemic.

• China cracked down on exports of rare earth elements and magnets to hit back at the U.S. for its tariffs. It controls the world's supply of these materials, despite yearslong efforts to diversify stateside.

• That leaves U.S. automakers with no other option for the rare earth magnets that are necessary for critical components, including headlights and steering systems.
• Ford temporarily closed a Chicago-area factory last month after magnets ran dry, the New York Times reported. An auto trade group warned the White House of a possible "shutdown of assembly lines," Reuters reported.

Another manufacturing gauge published by S&P Global found that supplier delays and price hikes spiked to the highest level since 2022 last month. Firms overwhelmingly blamed tariffs.

• "Smaller firms, and those in consumer facing markets, appear worst hit so far by the impact of tariffs on supply and price," Chris Williamson, an economist at S&P Global, said in a release.

What to watch: Trump administration officials say China has been slow to restart rare earth mineral shipments, which they claim violates the terms of the trade truce notched last month.

• Officials say President Trump and China's President Xi Jinping are due to speak as soon as this week; the minerals issue is sure to be near the top of the list.
• "We do not want to de-couple ... but we do need to de-risk," Treasury Secretary Scott Bessent told CBS's Face the Nation last weekend of the relationship with China.

The bottom line: The pandemic exposed America's supply vulnerabilities.

• Trump's tariffs are a reminder of the long and economically painful path to narrow those supply gaps.