Momentum is building across the U.S. manufacturing industry heading into 2025 — and potentially well beyond. Strategic investments, emerging technologies and shifting trade priorities are creating new opportunities across the sector. These forces are driving renewed interest in reshoring and reshaping production and capital planning decisions, but will tariff hikes and ongoing labor gaps hinder progress?
A major driver of this shift is the new presidential administration’s America First trade strategy. In March, President Trump released his 2025 trade policy agenda focused on favoring U.S. production to promote high wages, jobs, innovation and national defense. Trump also announced plans to use aggressive tariffs to raise tax revenue and entice companies to build factories in the U.S. — a move many businesses are now exploring to enhance supply chain resilience and stimulate regional economic development.
Tariffs decisions are not always clear, and their impact on the economy and our industries remains uncertain. On March 4, the 25% tariffs on Canada and Mexico took effect, alongside a doubling of the existing 10% tariffs on China. Additionally, reciprocal tariffs were imposed, further compounded by the existing 25% tariffs on steel and aluminum.
On April 9, President Donald Trump announced a 90-day pause on all reciprocal tariffs — to facilitate trade negotiations — except those imposed on China, which will see tariffs increased to at least 125%.
While the idea of revitalizing U.S. manufacturing is gaining traction, reshoring is far from simple. Historically, the U.S. relied heavily on domestic manufacturing, but globalization shifted much of this production overseas; moving operations back domestically will be a complex and time-consuming process. Building new factories and relocating companies will require substantial investment and planning, and higher labor costs in the U.S. could lead to increased consumer prices.
Economic Opportunities for Manufacturing
Despite these hurdles, reshoring could introduce opportunities for manufacturers, such as reduced reliance on international suppliers, faster turnaround times and improved production flexibility. Companies that invest in domestic production may gain greater resilience against global supply chain disruptions, reducing their exposure to unexpected international trade disputes and geopolitical risks. While upfront costs may be higher, long-term savings supply chain efficiencies can outweigh the short-term expenses.
Recent technological advancements in AI, automation and robotics, as well as lower domestic energy costs, add to the appeal of reshoring. Manufacturers are increasingly embracing innovation to streamline operations, lower costs and elevate product quality and throughput. Investments in these technologies are expected to continue accelerating in 2025 as companies work to stay competitive.
Overcoming Challenges
Manufacturers have long reassessed their global operations since the pandemic exposed vulnerabilities in offshore production, prompting companies to seek more control over their supply chain.
Another significant hurdle is the workforce. One major challenge is addressing workforce shortages. The demand for highly skilled workers in advanced manufacturing roles continues to outpace supply. While many companies have invested in workforce development programs and automation to offset labor shortages, the challenge of attracting and retaining talent persists.
Rising global economic pressures pose an additional challenge, particularly for companies reliant on imported components. These businesses may continue to face the persistent effects of inflation, which can significantly erode their profit margins. Higher initial investments are required for reshoring operations, with infrastructure updates and labor costs posing a significant financial burden. Additionally, regulatory complexities can slow down reshoring efforts, requiring businesses to navigate compliance issues and zoning requirements.
Impacts on Facility Design and Construction
Reshoring efforts are also reshaping how manufacturing facilities are designed and constructed, pushing companies to focus their facility planning efforts on building flexible, scalable — and often, automated — spaces that can accommodate increased production capacity initiatives as well as the integration of advanced technologies to address the growing labor gap and demands.
By future-proofing facility designs, manufacturers can adapt or expand their facilities quickly — as a response to supply chain changes and pressures. Additionally, with the integration of advanced technological systems, manufacturers can enhance their operations to get product to market as quickly as possible, as well as to help solve for other industry challenges and potential for supply chain bottlenecks.
The engineer-procure-construct (EPC) approach is a great project delivery methodology that enhances efficiency by enabling concurrent engineering and construction activities during the project lifecycle. The EPC approach also allows for adaptive design changes to meet evolving regulatory or project requirements, as well as early equipment procurement. To balance speed and cost, the EPC approach allows for innovative strategies to be applied to meet accelerated timelines and strict budget expectations.
Despite the challenges, the overall sentiment within the manufacturing industry is one of cautious optimism. Companies are reviewing their sourcing and production strategies, and while hurdles like worker shortages and high short-term costs remain, U.S. manufacturers may find opportunities for growth in 2025.
Editor’s note: This post was originally published April 1, 2025, and has been updated for context and accuracy.