U.S. manufacturing sector momentum has slowed through August 2025, with key indicators showing sustained contraction and employment losses growing. Strategic investments, the adoption of emerging technologies and shifting global trade priorities continue to shape the sector’s outlook.
A major driver of this shift is the new U.S. presidential administration’s America First trade strategy. In March, President Trump released his 2025 trade policy agenda, prioritizing U.S. production to promote high wages, job creation, innovation and national defense. Central to this agenda are tariffs focused on raising tax revenue and incentivizing domestic manufacturing. The goal is to strengthen supply chains and reduce dependence on foreign sources, especially critical minerals and advanced manufacturing inputs vital to national security but has also introduced new complexities and uncertainties for global trade.
As a result, many businesses are exploring new investments to enhance supply chain resilience and stimulate regional economic development. These policy shifts have created economic disruption, with manufacturing industries facing tariff-related hits to their bottom lines. Persistent labor shortages continue to challenge the sector’s ability to scale, and recent data shows that while job openings in manufacturing have increased, actual hiring has slowed.
Together, these headwinds raise critical questions about whether the current wave of investment and innovation can overcome the mounting pressures of trade barriers and workforce constraints.
The U.S. administration announced revised reciprocal tariff structures affecting multiple international trading partners, establishing differentiated rates based on bilateral relationships. Temporary trade agreements with select nations include modified tariff schedules with specific expiration dates. Enhanced penalties apply to certain countries based on policy concerns and anti-circumvention measures for rerouted goods. Click here for up-to-date information.
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 continues to present opportunities for manufacturers, including reduced reliance on international suppliers, faster turnaround times and improved production flexibility. While 2024 saw 244,000 jobs reshored or created through foreign direct investment, 2025 has presented mixed results. Companies investing in domestic production may gain greater resilience against global supply chain disruptions and geopolitical risks. While upfront costs remain high, long-term supply chain efficiencies and risk mitigation may outweigh 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 continue to challenge manufacturers, especially those reliant on imported components. Inflation and tariffs are eroding profit margins, and many companies are building up inventories to hedge against further cost increases. Higher initial investments for reshoring — such as infrastructure and labor — remain a significant financial burden, and regulatory complexities can slow progress.
Impacts on Facility Design and Construction
Despite current economic headwinds, reshoring efforts continue to reshape manufacturing facility design and construction. Many manufacturing companies are taking a more cautious approach to facility investments. However, those proceeding with construction are focusing on building flexible, scalable spaces to address challenges.
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 strategic project delivery methodology that enhances efficiency by enabling concurrent engineering and construction activities during the project life cycle. 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.
The manufacturing industry faces a more challenging environment than anticipated. Some companies are adopting more conservative strategies, focusing on operational efficiency and supply chain resilience while carefully managing expansion plans. The manufacturing comeback, while still possible, faces substantial obstacles. To help you stay ahead, we track and analyze trends, capital spend and industry outlook.
Editor’s note: This post was originally published April 1, 2025, and has been updated for context and accuracy.