A tariff is a tax levied on imported or, occasionally, exported goods, designed to regulate international trade and safeguard domestic industries. President Donald Trump’s administration intends to use tariffs for these purposes, as well as to support border security initiatives and compensate for revenue losses from proposed tax cuts.
As I contemplate this column, unexpected shifts, rapid deployment, and swift tariff alterations make writing challenging. In the current landscape of unpredictable tariff hikes, geopolitical tensions, port interruptions, natural disasters, and pandemic-era disruption, companies face unprecedented supply chain turmoil.
My purpose here is to cut through the confusion and uncomplicate the complicated – not to defend or oppose the tariff program but to understand it. As a result, hopefully, the industry can further explore reshoring and discuss the truth about tariffs, as reshoring can reduce uncertainty and mitigate risks.
Tariff Announcements, Reversals, and Pauses: The First 100 Days
January 2025: Trump promised to impose tariffs on many foreign countries, including Canada and Mexico, to “enrich our citizens.”
February 2025: The president signed an executive order to impose tariffs on imports from Mexico, Canada, and China. He subsequently paused the tariffs on Mexico and Canada. He also announced plans to hike steel and aluminum tariffs and impose reciprocal tariffs on a large swath of countries.
March 2025: The paused Mexico and Canada tariffs went into effect, and China tariffs doubled; however, a one-month exemption for U.S. automakers was granted. China reciprocated with tariffs and export controls. A 25% tariff on all steel and aluminum imports went into effect.
April 2025: Trump imposed “reciprocal” tariffs on almost all U.S. imports, but later issued a 90-day pause on tariffs above 10% for all countries except for China. China’s current tariff total is 145% as of this writing.
Policy Shifts and Uncertainty
These fast-moving tariff and trade policy shifts inject uncertainty into markets and companies’ decision-making as businesses grapple with their implications for manufacturing locations, investment, sourcing, corporate margins, and pricing.
The economic impact of tariffs depends on their timing, duration, scope, and potential for escalation, making complex sourcing location decisions difficult. Things are moving so quickly that more changes may have occurred by the time you read this column.
Are Companies Ready?
A recent study found that most organizations are monitoring tariff risks with limited preparedness, highlighting a gap in readiness amidst the uncertainty of international trade policies. (See Figure 1.)
For some industries, complicated supply chains will be a challenge to reshore. The U.S. automotive supply chain, for example, is a complex network with a typical car comprised of about 30,000 parts. A car component might cross the U.S.-Mexico border up to eight times during the manufacturing process before it is assembled into the vehicle.
Figure 1: Tariff Anticipation & Preparedness (Source: https://intelligence.endeavorb2b.com/wp-content/uploads/2025/01/Pulse-Tariff-Changes.pdf)
I Suggest Reshoring
U.S. manufacturers should consider reshoring to mitigate the risks of tariffs, uncertainty, and seismic policy shifts. Localizing production and sourcing will not only reduce geopolitical risk but also make supply chains more resilient and sustainable, encourage investment in infrastructure and workforce development, and strengthen the U.S. economy.
For those interested in the hard numbers behind reshoring, see the Reshoring Initiative’s Total Cost of Ownership (TCO) Estimator. TCO helps companies account for all relevant factors – not solely on price, which can lead to miscalculations of 20%-30%. The TCO Estimator is a free online tool and the best metric to use for comparative analysis of the true total cost of domestic and offshore sourcing and siting.
Here’s What I Think
If we have tariffs, they should apply to all products from all countries forever. The best way to use a tariff is through a value-added tax (VAT) because it wouldn’t lead to retaliation, unlike a direct tariff. There would be no grounds to retaliate, since U.S. peers already have a VAT. For example, the EU collects a 10% tariff on U.S. auto imports, which is four times the tariff on U.S. passenger cars. EU countries also have a 15% to 20% VAT on everything imported and then subsidize exports at the same percentage.
To improve competitiveness, VAT revenue should be used toward apprentice loans, extending full, immediate expensing of capital equipment, and lowering corporate tax rates. Some should be used to reduce the impact on lower-wage consumers.
We need improved workforce training, more apprenticeships, a lower corporate tax rate, and currency adjustment. These actions would create a competitive environment for U.S. manufacturers to get manufacturing productivity growing again. The Reshoring Initiative is available to help government policymakers establish a more effective, lower-cost industrial policy to bring millions more jobs back.
Some Companies Are Already Reshoring or Considering It
Some companies are announcing reshoring plans amidst the new trade policies. One of the most prominent reshoring announcements came from Apple Inc. The technology behemoth plans to spend $500 billion domestically, including on a factory in Texas for artificial intelligence servers, adding 20,000 R&D jobs over the next four years.
In response to the threat of pharmaceutical tariffs, Roche announced plans to invest $50 billion in pharmaceuticals and diagnostics in the United States over the next five years, creating 12,000 jobs. Eli Lilly pledged $27 billion to build four new U.S. plants. David Ricks. Lilly’s chair and CEO, said, “The Tax Cuts and Jobs Act legislation passed in 2017 during President Trump’s first term in office has been foundational to Lilly’s domestic manufacturing investments, and it is essential that these policies are extended this year.”
Other companies are considering reshoring but are monitoring the situation closely before making a move.
Michael Speetzen, CEO of Polaris, an off-road vehicle maker with a large plant in Mexico, said, “We have a presence that we would be able to leverage if we viewed this as a more permanent situation.”
Kia, Samsung, and LG Electronics have announced foreign direct investment (FDI) plans as they contemplate ramping up production in the U.S. market and shifting away from South Korea and Mexico.
Hyundai Steel is considering building a new steel plant in the southeastern United States.
Volkswagen Group’s Audi and Porsche are weighing shifting some production to the United States, likely due to lower taxes and higher tariffs.
Celltrion, a South Korean biopharma contract manufacturer, is considering acquiring U.S. manufacturing sites due to potential tariff threats.
Nissan CEO Makoto Uchida said, “We are exporting a large volume to the United States, so if there’s a high tariff, this will have huge implications on our business, so we need to monitor this carefully.”
Promises, Promises
I can’t promise you that the mentioned tariffs and company announcements won’t shift by the time you read this, but I can say that reshoring and FDI will mitigate the risks of tariffs and the impact of global policy shifts.
I suggest companies reconsider earlier offshoring decisions, engage in workforce training, and upgrade automation that makes economic sense. And, importantly, when calculating the ROI on the reshoring investment, use TCO, not just price or standard cost of goods sold.
Are You Thinking About Reshoring?
For help, contact me at 847-867-1144 or email me at harry.moser@reshorenow.org. Have you reshored a metal component or product? Apply for the National Metalworking Reshoring Award today.
