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US tariff drive fails to bring factories home and increases import reliance
A broad US tariff campaign has not produced the promised reshoring of manufacturing. A year after the introduction of steep duties, Morgan Stanley analysts conclude that the American economy has become more dependent on foreign goods and that no real expansion of domestic capacity has occurred.
The bank’s economists tracked import and industrial dynamics by sector and found that trade-chain reorientation has simply substituted for reindustrialization. In December 2025, the overall share of imports in US goods consumption rose to 33.6% from 32.8% a year earlier. For durable goods, the share jumped to 43.5%. In real terms, domestic production in 2025 increased by a modest 1.5%, or just over $100 billion, while imports surged 5.3%, adding $150 billion.
The machinery sector came closest to reshoring, with imports falling and domestic output rising. However, total equipment supply rose by a negligible 1%, and dependence on external supplies remained high at 44%. The steel industry presented an even more paradoxical outcome. Raising punitive tariffs from 25% to 50% collapsed steel imports by 30.1% and raised local production by 6% but reduced overall metal availability on the market. As a result, US steel now costs twice as much as Chinese steel and 50% more than European steel. The market adapted by pushing up prices rather than by increasing volumes.
Aerospace showed clear growth, but Morgan Stanley notes that this reflects Boeing’s recovery from past constraints rather than the construction of new plants. Meanwhile, US dependence on computers and equipment for artificial intelligence has hit record levels. AI-related imports reached $550 billion on an annual basis, accounting for 17% of all foreign supplies versus single-digit figures a couple of years earlier. About 40% of that volume is supplied by Taiwan alone. At the same time, direct foreign investment into US manufacturing has stalled at $110–125 billion, catastrophically short of the record $200 billion recorded in 2015.
Published 17 June 2026
© InstaFintech Group
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© InstaFintech Group
