It’s a tough time for global manufacturing. Between tariffs, exceptions to tariffs, trade conflicts, new deals, and market speculation, it’s tough to really understand what’s actually going on with global industrial supply chains, let alone predict the future. This means that, more than ever, manufacturing executives need to be steeped in fact, not speculation.
The 2025 Reshoring Index: The great reality check marks the 12th in a series of Kearney reports tracing the development and nature of US manufacturing reshoring and nearshoring activities. Over the years we’ve seen a shift from cautious skepticism to unbridled enthusiasm.
This year, we saw a downturn—proof that positive thinking is less effective as a market driver than the basic law of supply and demand—forcing us to confront a hard truth. While CEOs are more committed than ever to reshoring, the domestic manufacturing ecosystem is still playing catch-up, so the next phase will require not just capital, but coordination.
Coming on the heels of two years of sharp increases between 2021 and 2023, these declines might cause some observers to question whether we have reached an inflection point, an existential economic fork in the road, or just a pause that’s long enough to readjust our visor in anticipation of an uncertain journey ahead.
Answering that question requires blocking out the noise, looking past the confusion of the moment, and objectively assessing where we have come from, where we are, and where we might be going.
Here’s some of what we found
- In this latest edition, the manufacturing import ratio reversed course, as imports from 14 Asian LCCRs grew faster than US domestic manufacturing gross output—leading the Reshoring Index to decline by a staggering 311 basis points.
- US manufacturing output expanded by just 1 percent, despite continued capital investment in recent years. This modest growth, half the rate of the US market’s manufactured goods consumption increase, reflects the longer-than-expected lag between investment announcements and operational capacity coming online.
- Nearshoring partners also struggled to keep pace: US imports growth from Mexico trailed the boom of the previous two years. Mexico’s infrastructure—particularly roads, energy, and water—remains a persistent challenge, with several states struggling to provide enough electricity. Its workforce remains competitive, but that advantage is becoming harder to sustain as, driven in part by policy changes, labor costs increased by 4 percent annually, totaling a 14 percent increase since 2020.
- For its part, Canada recorded a year-over-year contraction of 3 percent in its exports to the US, in large part due to the similarity of the two nations’ manufacturing ecosystems. Labor and other production costs do not differ enough to provide Canada with a decisive competitive advantage.
- Filling in the gap between supply and demand, imports from Asian low-cost countries and regions (LCCRs), including China, increased by $90 billion (10 percent), led by categories such as computer and electronics and electrical equipment.
- The share of CEOs indicating they plan to reshore at least part of their operations in the next three years increased by 15 percent compared to last year, indicating continued long-term interest in making more products in the US.
- We saw about a 50 percent rise in CEOs citing geopolitical tensions as a primary motivator for reshoring, underscoring how politics are increasingly shaping supply chain strategy.
Although this year’s Reshoring Index results are surprising after the past two positive years, the data shows that companies aren’t walking away from reshoring: they’re pausing to reassess. Investments are continuing, but with greater caution.
The next phase of reshoring will be defined by hard choices about what to produce, where to invest, and how to compete in a fragmented, fast-moving world, knowing that manufacturing ecosystems scale best when market signals are strong and clear, capabilities are in place, and supply chains can flex and adapt with speed and confidence.
