MT Magazine January/February 2026

THE INDUSTRY UPDATES ISSUE

MANUFACTURING MATTERS

10

ADVOCACY

2025 Wrap-Up and 2026 Outlook: Manufacturing Policy 2025 marked a significant year for U.S. manufacturing policy, with Congress enacting several long-standing industry tax priorities. Permanent bonus depreciation, restored R&D expensing, continuation of the passthrough deduction, and increased Section 179 thresholds collectively provide greater certainty for capital investment, innovation, and small-business planning across the manufacturing technology sector. Looking ahead to 2026, trade policy will continue to be a central focus. The Trump administration continues to advance a layered tariff strategy, maintaining Section 301 duties on Chinese imports, pursuing reciprocal tariff frameworks, and progressing with Section 232 investigations involving industrial machinery and robotics. These developments are expected to impact pricing, sourcing decisions, and supply chain planning for manufacturers and technology providers. In parallel, Congress may revisit competitiveness, workforce, and supply chain legislation, while federal agencies, including those at the departments of Commerce and Defense, continue industrial base assessments and reshoring initiatives. Taken together, 2025 delivered tax stability, and 2026 is poised for sustained activity in trade and industrial policy. Lower Bank Rates To Start 2026 The Federal Reserve controls the money supply to maximize employment and the dual mandate is to acheive maximum employment and maintain price stability. Because monetary policy shapes borrowing costs and business expectations, it can strongly influence investment in new manufacturing technology. Interestingly, orders for manufacturing technology, according to AMT’s USMTO survey program, have remained fairly robust throughout 2025 despite the elevated interest-rate environment. Against that backdrop, the Fed’s latest move – a third consecutive quarter-point cut to a 3.5%-3.75% target range – helps set the tone for 2026. Updated projections point to stronger expected GDP growth, a gradual easing in unemployment, and inflation holding slightly above target. Machinery orders were already firming in late 2025, and improved financial conditions could support continued capital investment. Still, growing dissent within the Federal Open Market Committee reflects lingering uncertainty. As the Fed navigates the competing pressures of its dual mandate, manufacturers will be watching closely for signals that shape technology spending in the year ahead. INTELLIGENCE

Source: The Board of Governors of the Federal Reserve System