Pause in tariffs drove up manufacturing activity in June, says GEP report
The current US pause on tariffs helped push the GEP Global Supply Chain Volatility Index to a 2025 high in the month of June.
The index score jumped to -0.17 from -0.46 in May. A value above 0 indicates supply chains are being stressed, while a value below 0 means supply chain capacity is being underutilized.
The monthly index from supply chain consultancy GEP tracks demand conditions, shortages, transportation costs, and inventories and backlogs across 27,000 global firms.
The tariff situation remains fluid as ever. The Trump administration last week pushed back its tariff pause from July to August 1, threatening final tariff rates of 20% to 35% on trading partners such as Canada, South Korea, and Japan. Trump also said he will impose a 50% tariff on copper. During the pause, which has been in effect since April, the US has been imposing blanket 10% tariffs.
US markets currently appear to be operating on the assumption that the president will “TACO” – an acronym for “Trump Always Chickens Out.” If the president does eventually hold firm on his tariff threats, then the real economic fun can begin.
For now, the situation is copacetic, with the 10% tariff regime delivering no evidence for dramatic escalation of cost inflation.
In North America, supply chains effectively ran at full capacity in June, rising to -0.06 from -0.24 in May. US manufacturers ramped up their purchase of inputs in advance of a potential end of the tariff pause.
Europe achieved full capacity utilization for the first time in two years, rising to 0.01 from -0.30. The continent emerged from a prolonged industrial recession, with activity in June driven by front-loaded purchases from US customers and a rebound in domestic and export demand in Germany.
Asia showed signs of recovery, with the regional index rising to -0.27 from -0.40. There was stronger supply chain activity in India, Japan, and South Korea, while spare capacity remained in China, where factory purchasing continued to lag.
“In June, Europe shook off its long slump and global supply chains ran at full capacity — despite the uncertainty and on-and-off again tariffs,” said John Piatek, VP, consulting, GEP. “But under the surface, companies are putting in place contingencies: stockpiling inputs, reshaping supplier networks, near-shoring operations, and securing supply chain financing.”
Global factory purchasing in June rose to its most robust level in over a year, driven by the US surge. Reports of safety stockpiling were at their highest level in 2025, spurred by efforts to preempt tariffs.
Reports of material shortages remained historically low, while staff shortages were at historically typical levels.
Global transportation costs were in line with their long-term average in June.
