Bracing, Not Retreating

The fall 2025 U.S. Cutting Tool Institute Business Outlook reveals a tense, but stable toolmaker market. After three years of navigating post-pandemic supply disruptions, toolmakers now face more familiar stressors: tariffs, inflation and uneven demand — characteristics that also describe the outlook for the overall manufacturing industry. (Turn to “Optimism and Uncertainty,” page 24, for more on that perspective.)

Among the 28 USCTI member companies participating in the fall 2025 report, 43% expect higher total sales revenue in the final quarter of 2025, while roughly a third anticipate no change and a bit more than a quarter suspect declines. While this data may seem encouraging, many respondents noted that revenues are being sustained by price increases, not stronger order books. As one member wrote: “Revenues are only higher as a result of price increases due to tariff fee recovery.”

Raw material costs make matters worse. A striking 97% of respondents reported higher input prices, and half said delivery lead times are lengthening again. Carbide inflation remains the dominant headache, and tariff uncertainty has made budgeting almost impossible. “Raw material price surges and tariffs are increasing my costs faster than any other time in my 25-plus years in the industry,” one participant said.

Exports, once a modest growth engine, continue to drag. Only 13% of companies reported stronger overseas sales this fall, with most describing their export volume as flat or falling. Reciprocal tariffs have sapped momentum and forced some U.S. producers to focus inward, chasing domestic business instead of global expansion.

Perhaps the most sobering shift shows up in employment. After a long stretch of stability, 47% of companies reported lower headcounts, compared with just 23% adding jobs. For an industry that measures success in spindle hours, that’s a signal of cautious recalibration.

On the financial side, there is perhaps a sign of some stability. Just 20% of respondents said borrowing costs rose this year, while 57% saw no change and nearly a quarter reported lower rates. In the spring 2025 report, 12% reported higher costs, 56% saw no change and about a third said costs were lower. It’s a rare bit of good news in an otherwise cost-heavy landscape.

Taken together, the numbers — and the comments behind them — suggest an industry that is bracing, not retreating. With the ISM Manufacturing PMI still below 50 and carbide prices near record highs, 2026 will likely open with the same mix of anxiety and determination.

That balance — realism without resignation — may be the most defining trait of cutting tool manufacturing today. The industry knows how to keep its edge, even when the grind gets tougher.

For a more detailed analysis:

The Fall 2025 USCTI Business Outlook reveals how cutting tool manufacturers are adapting to rising costs, tariffs and slowing demand while maintaining resilience across a shifting global market. This extended analysis expands on USCTI’s survey findings, offering detailed charts, member insights and external market comparisons.