Sweeping tariffs ordered by President Donald Trump are wreaking havoc on Chicago manufacturer Freedman Seating Co., whose experience illustrates threats to other U.S. factories and the broader economy.
“I’ve never seen a supply shock like this in my working lifetime,” said Craig Freedman, CEO of the fourth-generation family business. “We are scrambling and running around doing everything we can to keep our supply chain rolling in.”
Freedman Seating’s factory in Austin on the West Side employs about 700 people. The company’s origins date from 1893, when founder Hyman Freedman made seats for horse-drawn carriages in Chicago and exhibited at the World’s Columbian Exposition. Now, workers — including welders, mechanics and laser machine operators — make 500,000 to 750,000 seats a year for buses, subways, trains, ferries and trucks. Its driver’s seats are found in delivery trucks used by UPS, FedEx and the U.S. Postal Service.
Trump this month said in a statement that his administration’s tariffs seek to “re-shore manufacturing, and drive economic growth for the American people.”
Instead, Freedman Seating and many of its domestic vendors are reeling. Sky-high tariffs on imports from China of up to 145% are particularly “devastating,” Freedman said. “They are going to grind certain aspects of our business to a halt.”
Phones are ringing constantly at Freedman Seating as the company works with its component suppliers, some based in the U.S., who are also struggling with spiking costs and uncertainty sparked by tariffs.
Recession fears
“We can’t operate in this uncertainty,” Freedman said. His company is already in a “recession,” he said, with sales down in recent months. And he predicted that the broader impact of tariffs “will almost certainly” bring the U.S. economy into a recession.
Already, Freedman Seating’s customers in the bus and truck industry in North America are slowing down their orders. “I’m afraid that we haven’t seen the full effects yet,” Freedman said of tariffs. “Inflation is going to rear its ugly head again.”
The Yale University Budget Lab estimates that the tariffs Trump has announced since taking office would lower U.S. economic growth by 1.1 percentage points this year.
As of last week, economists at Goldman Sachs predicted a 45% chance that the U.S. will experience a recession this year.
Although Trump ordered a 90-day pause April 9 on some tariffs on about 60 countries, uncertainty creates a “purgatory” with no real relief, Freedman said.
Trump’s trade policies can change suddenly day by day. In response, the U.S. stock market has plunged and experienced chaotic and historic swings.
Made in America — with international parts
Freedman’s seats are mostly for the U.S market, with some exported to Canada.
It manufactures in Chicago but gets many of its parts from overseas. For example, precision components come from Germany, Lithuania and other countries.
U.S. vendors that Freedman works with also procure from overseas. For example, domestic companies source upholstery fabric from countries such as Taiwan, Colombia, England, Lithuania and Mexico.
“How do you expect anybody to be able to reshore that overnight?” Freedman said. “Everything is connected in this world.”
There are few, if any, seat belt components made in the U.S., and there are “literally” no domestic suppliers for some parts, Freedman said. The company has already seen double-digit cost increases on many items, including seat belts.
Because of tariffs, a global trading system created over the last 70 years was “knocked down with blunt force in one day,” Freedman said. “There are places where tariffs make sense, but not in the way this was done. They’re just arbitrary and damaging to our economy.”
Meanwhile, the company already has containers with components being shipped from overseas. “There’s no way to stop them,” Freedman said. “We might have to pay 150% more for parts coming from China.”
Freedman Seating operates on thin margins, so tariffs that could range from 10% to 145% deal a harsh blow.
“Who loses out? We do,” Freedman said. “You will see that in industry after industry.”
Freedman Seating’s 650,000-square-foot factory is still running as it works on a backlog of orders. It hasn’t furloughed or laid off workers and hopes not to. Of about 700 employees, 75% live in or near Austin in some of Chicago’s most disinvested neighborhoods.
“Anything that affects us affects the community,” Freedman said.
Made in Chicago
In 1960, manufacturing employed more than 500,000 workers in Chicago and accounted for more than a third of jobs held by city residents, according to WBEZ. But over the years, the sector has declined for many reasons, including jobs moving overseas and automation.
Yet greater Chicago’s manufacturing sector remains one of the largest in the nation, generating over $103 billion in output and employing more than 418,000 people at 12,000 businesses, according to World Business Chicago. The city created 1,160 manufacturing-related jobs from 2022 to 2023.
Manufacturing “boomed at incredible levels” at the tail end of the pandemic and afterward but then softened as interest rates rose, David Boulay, president of the Illinois Manufacturing Excellence Center, told the Sun-Times in November.
Illinois is the country’s fourth-largest exporting state, with manufactured goods making up the largest share of exports, according to the Illinois Manufacturers’ Association.
“Trade is critically important to Illinois and our manufacturing sector,” Mark Denzler, CEO of the association, said in a statement. “Tariffs can be effective when used selectively against counties that are dumping products, stealing IP or otherwise gaming the system. There are concerns about blanket tariffs that will increase the cost of inputs and make it more expensive to manufacture products which will increase costs for consumers.”
Denzler added, “Businesses also crave stability and predictability, so tariffs being turned on and off make planning difficult.”
Global trade war, local impact
Yet tariffs are pausing momentum at the homegrown company that is today one of the world’s largest makers of specialty transportation seats. Freedman Seating recently invested $4 million to upgrade its facility in Austin, where it’s been operating since 1999.
As part of the Illinois Department of Commerce and Economic Opportunity’s EDGE incentive program, the company would get a tax credit after making that investment, retaining jobs and creating 50 new positions. Gov. JB Pritzker lauded Freedman Seating during a visit there in February.
But given the economic turmoil, Freedman Seating is slowing down hiring. The company doesn’t expect to finish adding new workers until conditions improve, so it doesn’t know when it can activate the tax credit.
It’s a loss for job seekers and the West Side.
“We have been a mainstay of the community for over 25 years. We offer good opportunities for people to earn a paycheck and new skills,” Freedman said. “The people that work here live here, and they spend here, too. Since we have arrived, little by little we’ve noticed the West Side is coming back to life. Working alongside many community partners has made a positive impact.”
But now a global trade war may chill the community’s budding revival.
Contributing: AP