Reshoring report paints ominous look at tariffs, immigration crackdown

By Karen Hanna

The latest Reshoring Index — an annual report released by global management consulting firm Kearney— opens with the usual dry economic analysis, revealing a challenging path ahead for manufacturing reshoring efforts. But it ends with a thought experiment that pushes against current government policies: 

Do tariffs and a U.S. crackdown on immigration really make anyone better off? The 12th annual report suggests no, presenting one view of the future in which the economy grinds to a near-halt and markets dry up.  

Amid the trade war triggered by President Trump’s tariffs on countries around the world, and reciprocal duties imposed against the U.S., the report, which came out April 30, also presents an alternative path — one in which countries simply make threats and never follow up, while business continues as usual. It pictures a scenario in which the manager of a mine concludes, “Sure, politicians blamed all their problems on the global free market, but they admitted happy citizens were good for their business.” 

The contrasting scenarios — pitting a future American manufacturing sector crushed by a “Deportation Decade” and the austerity and nationalism of a “New Nativist” movement against one in which business leaders have chosen to ignore tariffs and regulations to build a global economic network — present a sharp turn in tone from the first two-thirds of the 21-page report, which focuses on 2024 data to highlight hurdles to reshoring.  

Launched in 2013, the Kearney Reshoring Index is determined by dividing the import of manufactured goods from 14 Asian low-cost countries and regions (LCCRs) by the U.S. domestic gross manufacturing output to calculate a manufacturing import ratio (MIR). Figures are drawn from the United States International Trade Commission. According to the report, for the first time since 2021, the MIR is in negative territory — having dropped by more than 300 basis points. 

The report shows demand for goods turning from China to other LCCRs in Asia. For example, it says, “The climb in computer and electronics imports underscores that, despite active investments in these industries, the U.S. market continues to source vital components from Asian LCCRs, where production capacities are already in place.” 

In addition to using government and trade data from the year prior to the release of its Reshoring Index, Kearney's report also draws from a new survey. For the latest report, Kearney conducted its survey of 120 executives this spring, after Trump announced tariffs on goods imported from Canada and Mexico, but before his so-called Liberation Day announcement of sweeping tariffs on countries all over the world, which he later suspended until July. 

The survey revealed a “hard truth,” Kearney partner and study co-author Patrick Van den Bossche said in a press release: “While CEOs are more committed than ever to reshoring, the U.S. domestic manufacturing ecosystem is still playing catch-up. The next phase will require not just capital, but coordination.” 

The Reshoring Index notes that a post-pandemic push to shorten supply chains led to U.S. manufacturing growth. However, most U.S. manufacturing capacity is now spoken for, and inflationary pressures, persistent labor shortages and evolving skill requirements have dampened the potential for future gains. 

But citing factors that included the geopolitical situation and sustainability and cost control concerns, CEOs remain committed to the effort, with 15 percent more of them telling Kearney that they planned to reshore, compared with the previous year. 

“While industries such as primary metals and apparel/household goods show a strong eagerness to reshore within the next three years, others — most notably, automotive — are approaching with more caution, underscoring the reality that reshoring is not a one-size-fits-all strategy but one shaped by the unique pressures and priorities of each sector,” the report says. 

One development that could help is artificial intelligence (AI).  

The report states: “More than 65 percent of manufacturing executive respondents told us they believe AI will drive improvements in quality control, efficiency, and supply chain management within the next three to five years, which could help tip the balance toward U.S. manufacturing. A two-sided strategy pairing technology investments in AI and automation with workforce development is an essential pre-condition to success.” 

However, investment dollars in manufacturing in the U.S. lag far behind China, where, the report says, “AI is driving a surge in intelligent robots and DeepSeek is increasingly being leveraged to improve manufacturing performance.” 

Van den Bossche emphasized that rhetoric alone won’t be enough.   

“The 2025 Reshoring Index points to a reality check that exposes the gap between reshoring intention and facts,” he said in the release. “Despite executives being more committed than ever, this year’s report found the Reshoring Index turning back to negative territory, tied to global trade’s most basic drivers — supply and demand. This decline should not be interpreted to mean reshoring is going away, just that expectations for the strategy need to be tempered by market realities.” 

In a report bottom-loaded with an argument against tariffs, one figure stood out. According to the report, “Only 5 percent of manufacturing executive respondents told us they were able to source all their raw materials locally.”