The latest round of tariffs announced in August affecting roughly 90 countries at rates reaching 50% has intensified considerations for alternative production and sourcing strategies. 

Overall, the tariffs issue combined with geopolitical risk, rising labor costs overseas, and a desire for greater supply chain resilience are accelerating the push for reshoring.

The Tariffs Impact: Winners and Losers

Tariffs affect industries unevenly. For import-reliant manufacturers and retailers, the cost implications can be significant, and many firms have begun diversifying production and supply strategies. For example, Foxconn, Apple’s largest supplier, recently expanded production in Vietnam, U.S., India and Mexico.  

Conversely, U.S. manufacturers who source most supplies domestically can be more cost-competitive and risk-averse regarding supply disruptions compared to others who source overseas. 

Potential retaliation from trade partners like Canada and Mexico adds complexity. Although the USMCA compliant goods meeting “country of origin” requirements are exempt from tariffs (excepting steel and aluminum), the U.S. imposed additional tariffs of 25% on imports relating to border security and drug trafficking concerns. Both floated countermeasures, but are also in process of negotiations to address the border security concerns. Pending the outcome of these negotiations, companies with production strategies designed around free trade in North America, such as the automotive industry, are facing disruption from the tariff issue.

Retail Sector Realities

Retailers face steep exposure. Rising import costs could compress margins or lead to higher consumer prices, risking reduced spending in an already cautious market. Additionally, logistics reshuffling may introduce delays and operational friction, especially for firms with lean or global supply chains. Transitioning to alternative suppliers often involves trial periods, quality checks, and renegotiations, which all take time and strain internal resources. Walmart recently reported stronger than expected sales, but lower profits due to increased costs from tariffs on imported goods. Executives warn they expect to increase prices on 10% of goods to offset the higher costs.  

These pressures could spark interest in sourcing more U.S. products, but the shift is complex and can take time, particularly for products that have not been made in the U.S. in decades, or ever. Walmart launched a “Made in USA” program 10 years ago to promote sourcing more U.S. products, and told candidate suppliers that price points had to be competitive with imports, an objective that was difficult to meet at the time. But, with new advances in production automation and an increase in U.S. manufacturing capabilities and capacities, more products may be able to be sourced from the U.S. over time. In the near term, most retailers will either absorb costs or raise prices while considering alternatives.

The Long Game: Reshoring's Renewed Appeal and Momentum

The reshoring conversation isn’t new. As far back as 2011, Boston Consulting Group forecasted that China’s cost advantages were eroding due to factors like wage and shipping increases. The pandemic's supply chain disruptions accelerated the shift to considering U.S. manufacturing, as risk mitigation became a top priority for manufacturers. Companies began reassessing global footprints and sourcing strategies and those that took early action by diversifying their supplier base and reducing reliance on China are better positioned to absorb or adapt to the new wave of tariffs. While a complete exodus from China is unlikely, momentum is building for a more regionalized approach to production.  

In addition to pandemic disruptions and tariffs, industry-focused incentives have propelled U.S. manufacturing onshore over the past few years. The CHIPS and Science Act targeting the semiconductor industry catalyzed major projects like Taiwan Semiconductor’s Arizona facility and Samsung’s Texas site, the Inflation Reduction Act spurred EV and battery manufacturing investments such as Ford’s BlueOval City campus in Tennessee, and Department of Defense funding supported reshoring critical goods during the pandemic.  

The Trump administration has built on this momentum, and has stated that its continued focus is on semiconductors and leaving the CHIPS Act in place for now. The administration is also focused on pharmaceutical and aerospace/defense manufacturing, as well as AI technology and nuclear energy development, and has fast tracked permitting and removed other regulatory hurdles to promote investment. The recently-passed “One Big Beautiful Bill” also includes several tax deductions for manufacturers across industry sectors to support the U.S. manufacturing business case.

Obstacles in The Road to Reshoring 

Despite the momentum, companies eager to reshore will face obstacles. As these investments are extremely capital intensive, a thoughtful approach to finding the optimal location for near and long-term success is required and takes time.

In addition, surging U.S. manufacturing interest is competing with surging data center development, putting pressure on the reshoring equation. Available industrial sites are increasingly scarce due to recent mega-projects, like TSMC's $40 billion plant in Arizona and IBM’s $20 billion manufacturing facility in New York. Prepping new sites involves navigating complex zoning regulations, environmental reviews, and infrastructure upgrades which can take years and require substantial investment. The electric grid is also under strain, with heavy industrial demand and rapid data center growth causing substation delays and power constraints.

Labor availability presents another persistent challenge. Even with automation, new facilities depend on a steady supply of skilled workers. While workforce training efforts are expanding, gaps remain, particularly in rural and mid-sized markets. Pandemic-era shortages have left construction costs elevated and tariffs on materials like steel and aluminum may add to the pressure unless domestic supply scales up.

The case for reshoring is strong, but turning policy wins into operational results will require coordination between industry, government, and local communities.

Navigating the Tariff Maze Today

Today, reshoring offers resilience, speed, and cost parity, especially with tariffs. Mapping exposure and modeling cost implications under various tariff regimes is key.

Alternative sourcing strategies, regional supply chain realignment, or local investment may become necessary. But these moves should be driven by benefits like better control, agility, and customer responsiveness in addition to tariffs. 

Today’s convergence of trade protectionism, geopolitical risk, policy incentives and technology could mark a turning point. If companies respond with strategic investment and supply chain adaptation, 2025 might be a pivotal year for the next chapter in American manufacturing.

Michelle Comerford is the industrial & supply chain practice leader at Biggins Lacy Shapiro & Co.