2025 Reshoring Slows as U.S. Firms Reassess Supply Chains

Despite political pressure and executive enthusiasm, reshoring momentum across North America has stumbled. Kearney’s just-released 2025 Reshoring Index reveals that while U.S. CEOs remain committed to bringing manufacturing home, real-world challenges — from labor costs to supply chain constraints — have forced companies to reassess their reshoring strategies.

“The 2025 Reshoring Index points to a reality check that exposes the gap between reshoring intention and facts,” said Patrick Van den Bossche, Kearney partner and study co-author. “Despite executives being more committed than ever, expectations for the strategy need to be tempered by market realities.”

Key Findings: Sharp Reversal After Two Strong Years

The index shows a 311 basis point drop in the U.S. manufacturing import ratio for 2024, pulling reshoring momentum back into negative territory after two consecutive positive years.

Some key notes from Kearney’s report include:

• U.S. manufacturing output grew just 1% last year, lagging behind 9% growth in imports.
• Imports from Asian low-cost countries (LCCRs), including China, surged 10% year-over-year, adding $90 billion — particularly in computers, electronics, and electrical equipment.
• Mexico, still the U.S.’s top manufacturing trade partner, accounted for 16% of total imports ($457 billion), but faced limits from infrastructure constraints and rising wages.
• Canada saw a 3% drop in exports to the U.S., reflecting tight economic similarity and limited cost advantages.

Rising CEO Caution and Geopolitical Pressures

While the data signals a pause, it doesn’t signal retreat.

• 15% more CEOs plan to reshore operations in the next three years compared to last year.
• About 50% more CEOs cited geopolitical tensions — particularly between the U.S. and China — as key motivators for reshoring, reflecting how politics are reshaping long-term supply chain strategy.

“Even if the tariffs previously imposed on China were to ease… the preferential treatment of Mexico over China would remain significant, further fueling Mexico’s manufacturing momentum,” said Jorge Gonzalez Henrichsen, co-CEO of The Nearshore Co.

Market Implications: Investments with Caution

Despite setbacks, executives are not walking away. Instead, they are recalibrating:

• Where to invest?
• What to produce domestically?
• How to maintain flexibility in a volatile, fast-moving global market?

As Omar Troncoso, Kearney partner and report co-author, put it:

“As U.S. demand outpaced what domestic production could supply, Mexico was not able to fill the gap. We saw manufacturers reverting to sourcing from those distant Asian low-cost countries and regions they had relied on in the past.”

The reshoring wave isn’t ending — it’s maturing, with firms realizing that scaling U.S. manufacturing requires more than good intentions; it demands hard choices, smart investments, and resilient supply chains.

Source: Kearney | FreightWaves