Reshoring in the United States: Features and Prospects

Abstract

The phenomenon of reshoring, which refers to the relocation of production facilities from a parent company to the country of origin, is a well-known business practice. The current geopolitical climate, characterized by heightened trade tensions between the United States and China, as well as the global pandemic, has significantly spurred the widespread use of reshoring in the global economy. This has also led to a surge in research attention on these processes. The objective of this paper is to analyze the trends of reshoring in the United States, based on the examination of a number of indicators, including the AT Kearney Index, to identify the various forms of reshoring activity of companies. As a result of this research, the author reaches the following conclusions: The dynamics of the US reshoring index suggest that the return of industrial production from China to the US has not yet occurred at a significant scale. At the same time, there is a transfer of production from China, but not in the form of classical reshoring “back to the United States,” but to Asian countries proximate to China. The diversification of US industrial imports is becoming increasingly evident. While the share of imports from China is falling, the share of imports from alternative Asian countries (Altasia), including Vietnam, Taiwan, India, Malaysia, Thailand, and others, is rising. At the same time, the value of US industrial imports from Asian countries, including China, is increasing. In addition to the relocation of US manufacturing imports from China to Latin America, there is clear evidence of nearshoring, the transfer of production capacity to countries in the region that are geographically close to the United States. Mexico, in particular, has emerged as a prominent destination for both US and Chinese firms seeking to relocate production. In the context of reshoring, a growing number of companies are adopting a “right reshoring” model, which involves abandoning the search for the lowest-cost locations in favor of “best cost” locations. These locations prioritize sustainability and supply chain reliability in addition to cost. We believe that the trend towards “right reshoring” will intensify in light of the US economic policy in this area, which aims at more active government intervention to support domestic production under the “Made in the USA” label.