Morgan Stanley Analysis of Reshoring One Year After US Tariffs
Morgan Stanley economists used a framework tracking industrial production, imports and exports across sectors and concluded that the U.S. economy has become more, not less, reliant on imports since the sweeping tariffs were imposed in 2024. Overall import penetration for all goods rose to 33.6% in December 2025, up from 32.8% a year earlier, while durable‑goods penetration increased to 43.5% from 42.7%.
The analysts estimated that sectors showing potential reshoring signals added only approximately 1.1% to domestic supply growth, whereas sectors classified as offshoring contributed approximately 1.4%, indicating that offshoring outpaced reshoring in volume terms.
In 2025, domestic production rose by just over $100 billion (about 1.5%), while imports grew by roughly $150 billion (about 5.3%), based on BEA and Census data. This net increase in import volume underscores the limited impact of reshoring.
Machinery displayed the strongest reshoring signal, with imports declining and domestic production rising, yet total domestic machinery supply grew only approximately 1% in 2025 after 0% growth in 2024, leaving overall capital‑stock expansion minimal. Import dependence in the sector remained high at approximately 44%.
Steel faced Section 232 tariffs that were raised from 25% to 50% in 2025. Iron and steel imports fell 30.1%, while industrial production for the sector rose 6%. Despite the production gain, total steel supply fell marginally, and U.S. steel prices now trade at roughly twice Chinese levels and carry a 50% premium over European prices, indicating price‑based adjustments rather than volume changes.
In aerospace, the largest share of industrial‑production gains since the October 2024 trough stemmed from Boeing’s recovery from production constraints, not from new domestic capacity.
Computers and AI‑related goods exhibited the sharpest rise in import dependence. AI‑linked imports ran at an annualized rate of over $550 billion, representing approximately 17% of total U.S. imports, up from single‑digit percentages two years earlier, with Taiwan supplying roughly 40% of those AI‑linked imports.
Manufacturing foreign direct investment into the United States remained in the $110 billion to $125 billion range in recent years, well below the 2015 peak of over $200 billion.
Morgan Stanley emphasized that “reshoring is not simply a redirection of trade flows — it requires rebuilding domestic capacity, which raises the cost & time needed to expand capacity.”