Momentum across the U.S. manufacturing sector remains mixed in mid 2025, with some indicators showing renewed growth and others reflecting ongoing contraction. 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. However, these policy shifts have contributed to higher input costs, greater supply chain complexity and ongoing uncertainty due to tariffs and potential further trade actions. 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.
On April 9, President Trump announced a temporary reduction of reciprocal tariffs for all U.S. trading partners except China, maintaining a 10% baseline tariff for most countries. A 145% tariff on Chinese imports remained in place, with limited exemptions for certain electronics.
Following negotiations in Geneva, on May 12, the U.S. and China agreed to temporarily reduce tariffs for an initial 90-day period. Under this agreement, the U.S. lowered its headline tariff on Chinese goods from 145% to 30%, but multiple earlier tariffs — including those under Section 301 and Section 232 — remain in effect, resulting in effective rates above 30% on many Chinese imports.
The U.S. recently raised steel and aluminum tariffs to 50% and announced a 50% tariff on copper effective Aug. 1. While China reciprocated by cutting tariffs on U.S. imports from 125% to 10% and suspended certain retaliatory measures, the overall trade environment remains complex and subject to ongoing negotiations. All these measures are provisional and could change as discussions continue.
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. In 2024, more than 244,000 jobs were reshored or created through foreign direct investment, and early 2025 data show this trend continuing. 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
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 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.
Despite 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.