As government stimulus packages aim to strengthen domestic manufacturing, companies considering reshoring must urgently reassess their supply chain strategies to stay price-competitive.
The pressing question is: will they bring some or all of their production back to the US or continue offshoring parts of their supply chain to cheaper locations?
Reshoring versus nearshoring
The main goal of the Trump administration’s tariffs is to reinvigorate US manufacturing. Reshoring, which refers to the process of bringing manufacturing and production back to a company’s home country, helps companies avoid significant tariffs. However; reshoring is a long, complicated, and expensive process, especially when supply chains have been embedded offshore for decades.
Companies reshoring to the US will have to build new factories and assembly centres, change supplier networks, and follow strict labour laws and regulations. They will also face high labour costs and may encounter labour and skills shortages. Addressing these issues will require significant investment in reskilling the available labour market, reorganising infrastructure, and exploring automation opportunities to deliver the same output level.
In addition to these factors, a company’s decision to reshore is dependent on extensive cost-benefit analysis calculated on predictable tariff rates, which have yet to stabilise. Therefore, partial reshoring will be a more realistic approach for many US companies, where only the parts of a supply chain most exposed to higher tariffs are reshored, while the rest of the supply chain stays put to protect a company’s bottom line.
In contrast, nearshoring offers a more balanced approach. Companies can move manufacturing away from countries subject to high tariffs, but rather than moving back to the US, they move to countries closer to the material sourcing location or the final consumer. The benefits of nearshoring include lower labour costs, an easier regulatory landscape to navigate than the US, and reduced shipping costs and times. However, any decisions regarding nearshoring to Mexico and Canada will likely be postponed until the US-Mexico-Canada (USMCA) free trade agreement is renegotiated. Meetings on this will begin in Q4 2025.
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Due to cost considerations, companies in low-skilled labour-intensive sectors like textiles and consumer electronics will not reshore production back to the US. For example, US clothing manufacturers like Nike, Nordstrom, and Reformation have all stated that they have no plans to build up their US manufacturing capacity. In contrast, advanced manufacturing industries with large consumer bases in the US, such as semiconductors and pharmaceuticals, are far more likely to reshore production.
Strong intellectual property protection, automation opportunities, and government incentives will further incentivise these industries to move to the US. In 2025, Roche, Novartis, Lilly, and Johnson & Johnson all announced that they were investing a combined $155bn in their plans to reshore to the US.
The cost of reshoring
Apple is a prime example of the complexity of global supply chains. The tech giant has been singled out by President Trump and threatened with higher tariffs on its products made or assembled in China, India, Vietnam, and Thailand. Currently, Apple relies heavily on China for its raw materials and manufacturing capacity, with 90% of its products still produced there. Given the ongoing US-China trade disputes and tariff uncertainty, Apple has pledged more than$600bn to reshoring production to the US, but has stated that it will take time to reconfigure parts of its supply chain.
Despite the heavy commitment, a majority of the pledge will be to assist Apple semiconductor and server suppliers, including Texas Instruments, in reshoring back to the US, while the production of its hardware products will likely remain abroad.
A reality check
Ultimately, completely reshoring Apple’s manufacturing processes is financially unviable and completely unrealistic. Apple is much more likely to take the tariff hit, shift its production away from China, and spread it across more neutrally aligned countries, including India, Vietnam, and Thailand.
In summary, tariffs are forcing companies to reconfigure and re-evaluate their supply chains. While the tariffs aim to localise supply chains and increase domestic productivity in the US, for most industries, it will not be financially viable to reshore whole supply chains back to the US.
The decision to remain offshore, choose to nearshore, or reshore parts of a company’s supply chain will depend on the industry’s demands, its unique characteristics, and the geographic location of its main market. For the most part, nearshoring will be preferred by most large multinational companies to avoid higher tariffs while retaining the benefit of lower labour costs from offshoring.
Reshoring will be limited to advanced industries with higher production costs and a significant presence in the US market. Despite billion-dollar pledges, most reshoring projects will likely only start when the tariff situation has stabilised, reassuring companies that the reshoring commitment is financially feasible.
