Reshoring Index Shows Little Impact from Tariffs

One of the main reasons the Trump administration said it was making a major push to impose tariffs on U.S. imports was to spur American manufacturers to bring their factories back home  – a process known as reshoring. But according to the latest edition of an annual report on reshoring by management consultant Kearney, tariffs (which have been curtailed by a series of court decisions in recent months) barely moved the needle on bringing manufacturing back, while some kinds of imports continued to surge.

Dubbed the Kearney Reshoring Index, report tracks the manufacturing import ratio (MIR), comparing imports from Asian low-cost countries and regions (LCCRs) against U.S. domestic manufacturing gross output to determine shifts in manufacturing sourcing. A positive index signals net reshoring while a negative one indicates continued net offshoring. (The index uses macro-level US manufacturing and import data, rather than surveys.)

Here are the just-released survey’s main findings:

• Kearney’s Reshoring Index remains in negative territory, but improved slightly, from −115 to −91.
• Tariff policies aren’t yielding hoped-for results, in terms of bringing manufacturing back to the U.S.
• U.S. imports of manufactured goods increased by 4.6 percent.
• Two major product categories that currently make up more 40 percent of Asian imports – specifically computer/electronics and apparel/accessories, show small signs of reshoring.

“As in the past few years, it’s important to pay attention to the nuances in our latest report,” said Kearney partner and lead author Patrick Van den Bossche. “The rise in imports is really being driven by [the two categories mentioned above], which make up 44 percent of all Asian LCCR imports. Both are tracking counter to small but promising signs of a broader trend we’re starting to see in most of the other categories. The dollar value of these two biggest import categories, which we show in the report are also the hardest to reshore, skews our Reshoring Index picture from an aggregate perspective.”

Van den Bossche adds, “While the overall picture may look bleak, individual product category performances offer more promise. Most product categories are starting to rely less on imports. Their domestic production as a share of their total U.S. consumption went up slightly compared to the portion tied to imports from the Asian LCCRs, but not yet enough to conclusively state that we have turned the corner. And many current and future events can still derail a true US manufacturing resurgence.”

Click here to see the full report.