Global Economic Briefing: Reshoring? Not Quite Yet

Research evidence excerpt

Global Economic Briefing: Reshoring? Not Quite Yet

Global FoundationM

Executive Summary

One year ago, we published Supply Chain Strain, a deep dive into global supply chains

that argued rewiring supply chains requires rebuilding productive capacity — often in

complex, highly concentrated sectors — implying long timelines, high capital intensity,

and elevated execution risk.

We revisit reshoring now that tariffs have been in place for a year. Trade barriers are

now central to US economic policy, and tariff rates are likely to remain meaningfully

above pre-2018 levels, even if the path is uncertain. The question is no longer whether

supply chains are shifting, but how — and whether the shift reflects real changes in

productive capacity.

In our view, true reshoring requires sustained growth in domestic capital stock and

manufacturing capability, not just changes in trade patterns. Distinguishing reshoring

from rerouting is difficult: Trade flows move for many reasons — tariffs, inventory cycles,

demand shifts, and third-country routing — and may or may not signal meaningful change

in underlying productive capacity.

We argue that reshoring is likely to be narrowly focused, highly technical, and involve

an up-front load of imports to establish modern capital stock. The US has such a

shortage of modern capital stock after years of under-investment and such high

dependency on importers for many imported goods (see discussion here) that reshoring

will need to be focused. Tariff levels will not offset the investment costs, so the US is

likely to focus where it will have a competitive advantage.

Using a high-frequency, industry-level framework combining industrial production

(IP), imports, and exports, we see early signs of narrow and selective reshoring. US