Numerous reports stipulate that many U.S. companies are finally deciding that home is where the heart is–or simply deciding that it’s more efficient and better business to return to the U.S. due to technological, economic, and political factors. Reshoring is happening, along with near-shoring, and the past system of having other countries manufacture goods and selling them in the U.S. is downright quaint.
Reshoring is not a new development. Companies started coming back home to the U.S. about 3 years ago. The U.S. Department of the Treasury published a report in June 2023 about the “striking surge” in construction spending by U.S. manufacturers; and that since the end of 2021, construction spending on manufacturing had doubled. The government had caused this increase. Yes, in the middle of the pandemic the U.S. had spent major dollars in infrastructure, jobs, and technology acts to fund and tax incentivize major economic sectors of the country.
Spending started rising before the CHIPS Act and related legislation was passed. The CHIPS and Science Act was signed by President Biden in 2022. The law authorized that over $52 billion would be allocated for projects domestically based in semiconductor, science, and other manufacturing projects. Tax advantages were attached to the package as well. Many economists opine that these acts kept the U.S. from slipping into a recession during the dark days of the pandemic. The act was also enacted to address supply chain vulnerability and reduce reliance on foreign equipment and supplies, especially from Asia.
The Treasury report noted that Deutsche Bank Research had found that “18 new chipmaking facilities will have started construction between 2021 and 2023.” And the Semiconductor Industry Association reported that over 50 semiconductor projects were announced because of the CHIPS Act.
A surprising aspect of the U.S. increased manufacturing spending was that the U.S. was the only country that experienced growth in its manufacturing, construction, and related business activities. Japan experienced increased manufacturing, but was still below pre-pandemic activity levels; Germany’s spending on factories and workshops had remained stable for the last decade; there were no big increases in the United Kingdom and Australia in 2022.
Globalization Lost its Advantages
The seeds for blowing up globalization had been planted for years, and Covid came along, exacerbating weaknesses in the global chain. While overseas outsourcing initially offered significant cost advantages, many factors eroded those benefits. Labor costs in Asian countries were significantly lower than those in Western countries years ago; these costs have steadily increased over the years.
And now, as HROne reports, tech and Artificial Intelligence (AI) jobs are increasing their pay 10% to 15% annually. “China is transitioning from a low-cost labor hub to a high-value talent powerhouse,” the report states. Workers are being trained in industries such as AI, life sciences, and other tech-related industries. These jobs demand higher pay and benefits, much as U.S. firms supply.
The report states that like the situation in the U.S., China’s workforce is better educated and skilled. Workers make companies pay for their skills, not just their time. And, like in the U.S., there are talent shortages in tech and other highly skilled fields which are pushing up labor pay demands. The report points out that Suzhou, Hangzhou, and other cities are undergoing infrastructure and employee upgrades and retention, resulting in increased spending, leading to local inflation. Much like what is happening in cities in other advanced and advancing countries around the globe.
Globalization, as reported by Global Logistics, a freight management and technology company in Portland, Oregon, has become less attractive for other reasons. One reason is port congestion. Tradlinx reports that global port congestion “has escalated into a full-scale logistics crisis as of June 2025.” The report states that 96% of the global major container ports are reporting “operational disruptions and vessel delays surging up to 300% above normal.” Many important ports, such as Rotterdam, Cape Town, and Singapore, are among the worst affected. These disruptions are the worst since the days of the COVID pandemic.
The report states that globally only 58.7% of the ships are on time, whereas the average on-time arrivals in the pre-2020 days were 80% to 90%. The fees charged for failing to return a shipping asset on the agreed-upon period (demurrage fees) run anywhere from $75 to $300 a day, and with on-time agreements not being met, shipping budgets are being wrecked. In many major ports the waiting time is over 10 days.
An update from UN Trade and Development (UNCTAD) pins much of the global instability and the failure of globalization on the U.S. policy shifts, such as those instituting new tariffs. UNCTAD states that one country’s policy changes can disrupt the global supply chain, and that “The United States’ recent policy shifts illustrate this. As the world’s largest importer, even modest changes reshape supply chains and alter global trade flows.”
The report points out that “Policy uncertainty is rarely accidental.” Globalization kept trade between trading nations steady for decades, and uncertainty and tensions rose only in incidents such as Brexit, COVID-19, and other rare events. This changed in 2025 because of weakened rules, policy changes, competition for raw materials, and other factors causing “uncertainty . . . soared to record levels.”
UNCTAD reports that uncertainty over when tariff rate changes will apply and other details, including what the new rates might be, often triggers front-loading, which involves purchasing goods before they are needed to avoid higher tariff charges. Air shipments to the U.S. increased 10% in the first quarter of 2025 compared to the previous year’s quarter 1. Imports dropped significantly in the second quarter, when tariffs went into effect. This shows that uncertainty disrupts normal trade patterns.
Other factors, such as overseas factory shutdowns and raw materials shortages have contributed to globalization’s slowdown. But the winding down of globalization is only part of the story. Manufacturers are declaring that the total cost of ownership (TCO) drives many supply chain and reshoring decisions, according to the MEP National Network. Their report states that “TCO is the sum of all visible and hidden costs associated with the acquisition, transportation, storage, finance, transactions, and environmental impacts of every activity of the supply chain.”
MEP posits that TCO clarifies risks and adds structure for supply chain optimization, which improves overall manufacturing value. Many companies already had their supply chain set up.
These companies will have to make changes now because the supply chain has changed. As they set up new chains they will see that recent developments will increase the chore, such as: technology has grown to being of utmost importance in the manufacturing process.
Advanced manufacturing technologies—automation, robotics, AI, and data analytics—are reducing the need for large labor forces while increasing precision and productivity. These innovations are helping U.S. manufacturers compete with low-cost countries by doing more with less, making reshoring financially feasible even in traditionally cost-sensitive sectors.
The Promise of Reshoring
The MEP National Network writes that bringing manufacturing closer to the U.S. reduces the U.S. supply chain risk and adds resiliency to the manufacturing process. Reshoring is a good way for manufacturers to lower transportation costs, heavy port traffic expenses, and other additional charges. But for small and medium-sized manufacturers (SMMs), that are usually not experts in supply chain logistics, reshoring takes a lot of preparation and work.
Since the COVID-19 Pandemic, many economists have questioned the reliability of the global supply chain. The pandemic brought out the uncertainty that accompanies foreign manufacturing relationships. When things go wrong, such as shipping delays because of lack of ships, costs spiral dramatically.
The future is very much “up in the air” in the year 2025. There are shifting geopolitical forces and trade tensions that make it hard if not impossible to decide what strategy to use and how to use it in world trade. This has created a stop-and-go posture worldwide for business leaders and investors. Still, business activity has gone on, with uncertainty making any judgements short term.
Possible Outlooks
The Geneva, Switzerland based World Economic Forum and the global management consultant firm Kearney teamed up and put out a report that gives four possible scenarios on the future of global supply chains. Their conclusions are a good road map to where we are and produce some answers to where we might go. The report explores where there are common priorities that will spur making changes no matter how high the risk might be.
The most favorable is the Reformed Outlook, where each nation’s institutions trust each other. Rules are established, and nations cooperate with each other in many subjects, such as trade and public health. The second-best result is the Fragmented Outlook. This is where trading partners pursue trades that are best from them but also trade elsewhere when they see advantages. Countries are not necessarily making allies, but trading where they have self-interest needs fulfilled.
Volatility Outlook are the operational words in looking at the third best plausible result. In this scenario, economic alliances are unstable, and geographic regions that were once secure find instability. Also surges in capital holdings are more frequent, there are spikes in inflation, currency unreliability, and other different and new factors all of which make it difficult to find reliable supply chains on an ongoing basis.
Degraded Outlook is the fourth of the reasonable outcomes of future supply chains. An era of deglobalization is caused as nations become more uncooperative with each other. Shortages are caused by nationalization interests, tariffs, and embargoes. Prime trade corridors become unusable or controlled by government interests. Labor markets become understaffed because of limited migration.
So, What Do Investors Do Now?
Look for value, which is not that easy to do, not with the stock market near all-time highs. Also, risk is a factor at these levels, and the tariff situation could make things far worse than expected. Could also make it better. Holding equities with a reasonable valuation basis could give fundamental support on the downside. Tariffs make the whole thing more uncertain. It might be years before all countries settle on trade partnerships.
In the small-cap space, which is starting to perform after underperforming for years, investors could consider iShares Russell 2000 Growth ETF (IWO) on a valuation and growth potential basis. The Price/Earnings to Growth (PEG) ratio according to Morningstar’s numbers is .66. A reading of 1.00 is considered reasonable, making IWO appear undervalued. Technology and health care comprise about 45% of the ETF, sectors that are favorites to continue growing even in a slower economy.
Investors could also look at international stocks. Many are selling at a reasonable valuation and have good upside potential, including Vanguard Total International Stock ETF (VXUS). The ETF is somewhat unique in that its holdings include equities from emerging markets and developed markets. Also, XVUS holds small-, mid-, and large-cap stocks. Using Morningstar’s estimates, the PEG ratio is .37.
