[This report is an excerpt of Kearney’s 2026 Reshoring Index, republished with Kearney’s kind permission. Dollar figures refer to USD.]

When you consider that overall US imports of manufactured goods went up by $133 billion (4.6%) between 2024 and 2025, it might be easy to conclude that, despite tariff policy changes, America is relying even more heavily on imports rather than on increasing domestic production. But a detailed look at individual product categories tells a more nuanced story.

While the two biggest Asian low-cost countries’ and regions’ (LCCR) import categories, computer and electronic products and apparel and accessories, continue to outpace the growth of their US domestic production and are even more reliant on offshoring than in previous years, the majority of product categories are actually seeing an opposite trend and are showing some small but promising signs of reshoring.

This may look familiar since in 2022 and 2023 most product categories saw a similar uptick in their category-specific Reshoring Index, but as outlined in last year’s report, that positive movement quickly reversed again the following year.

The picture has changed since then. Over the past four years, significant capital flows have been directed toward manufacturing, with annual investment numbers double or even triple compared to pre-COVID. So far that’s only translated into a modest increase in capacity, but one can reasonably expect those announced investments will come to fruition sometime in the near future.

How roughly $300 billion in US imports changed country of origin while US manufacturing stayed flat

At first glance, at least on aggregate, it might look like reshoring took another hit. Before tariffs and duties, manufactured goods imports increased from about $2.85 trillion in 2024 to roughly $2.98 trillion (+4.6%) in 2025, albeit with a countries of origin profile that changed significantly.

Direct imports from mainland China fell by almost one-third. At the same time, the other 13 Asian LCCRs that historically benefited from US manufacturing offshoring picked up an even bigger amount in absolute dollar value, gaining $194 billion while China lost $135 billion (see Figure 2).

How tariffs redirected sourcing away from China

Our annual Reshoring Index Survey, conducted in March 2026, clearly shows tariffs have reshaped some sourcing patterns but, as pointed out elsewhere in this report, tariffs didn’t seem to drive significant near-term increases in reshoring or reduce America’s total import dependence.

Since the Liberation Day tariff percentages were announced, the effective rate of the tariffs that resulted by country and/or product fluctuated dramatically as the year went on.¹ So, it’s worth taking a quarterly view to understand the short-term impact of the tariffs.

One thing is immediately clear. All regions saw their first-quarter import volumes go up year over year but — post-Liberation Day — the year-over-year quarterly import changes from different countries and regions of the world were impacted differently depending on both the size of their tariff increase and their relative cost position.

For example, Canada and Europe, which historically haven’t had a big cost advantage over the US or other countries, lost import volume even with relatively small tariff increases. As mentioned earlier, since they bore the brunt of the tariff increases, imports from mainland China were hit the hardest. But other countries and regions — traditionally known for being low-cost — saw their imports increase compared to 2024, not just in the first quarter of 2025, but throughout the entire year.

Combined with the fact that the US manufactured goods output (MGO) remained flat, this clearly indicates that in an environment of uncertainty and with affordability pressures top of mind, companies favored reversible moves such as building inventory in the first quarter of 2025, as reported by 86% of our survey respondents. Seventy-five percent of respondents reported switching country of origin away from China to other low-cost countries and regions as opposed to increasing their reliance on domestic manufacturing, which only 20% of survey participants reported looking at.

Canada also lost as its US imports dropped by $25 billion, but on the opposite side of the United States-Mexico-Canada Agreement (USMCA), Mexico continued to benefit from the continuing shift away from China. Primarily thanks to a $47 billion increase in computer and electronics products imports, partly offset by a decline in some other product categories, Mexico saw its imports grow by 8%.

Europe picked up $62 billion in US imports, although the majority of that increase was due to a 66% year-on-year increase in the first quarter. That surge was followed by a gradual decline in the three quarters following Liberation Day but Europe imports still managed to end up positive overall by the end of the year.

Why continued growth in nearshoring from Mexico is no longer guaranteed

Last year, Mexico continued to benefit from the ongoing reduction in imports from China and reaffirmed its position as the biggest source of US imports, even as uncertainty with respect to the future of the USMCA increased.

US imports from Mexico rose by 8% between 2024 and 2025, primarily driven by a $47 billion increase in computer and electronics products (C&E) imports. Much of Mexico’s C&E gain is still concentrated in downstream assembly rather than in higher-value semiconductors or other upstream components, for which it relies on Asian LCCRs.

Across product categories, Mexico draws in a broad set of upstream manufacturing inputs: imports from Asia rose 17.7% in 2025, with especially sharp increases from Taiwan (China), Thailand, the Philippines, and Malaysia. Imports from Europe into Mexico also rose by 16.5%, suggesting Mexico is pulling from an even wider supplier base as it expands its role as a final assembly partner for the US market within a broader regionalized supply chain.

Meanwhile, Chinese companies continue to look to investing in manufacturing in Mexico as an “opportunity shaded with caution” — with several recent announcements of continued China-driven expansions in Durango (LED lighting), Tijuana, and Monterrey (TVs), and, potentially, Morelos (automotive) — while keeping a close eye on USMCA developments.

Some of the constraints reported on in previous editions of the Reshoring Index seem to have somewhat abated. Mexico City and Monterrey remain tight industrial markets with low vacancy and strong absorption but conditions have eased in some other hubs, and Mexico’s industrial construction dropped to 4.2 million square meters at the end of the fourth quarter of 2025, down 30% versus 2024. In the leading industrial hubs, labor remains significantly more expensive but availability has become less of an issue.² On the other hand, access to utilities and logistics capacity continue to represent constraints which vary across industrial clusters and regions within Mexico.

Security remains a recurring structural drag on investor confidence. High-profile episodes such as the military operation that killed CJNG (Jalisco New Generation Cartel) leader “El Mencho” create severe, but temporary, operating disruptions.

Changes in domestic policy are another important factor. Mexico’s judicial reform, which now mandates the direct popular election of most federal and state judges, magistrates, and Supreme Court justices, has raised concerns with companies and investors about legal certainty as 881 newly elected judges take their seat. Several enterprise confidence readings fell below 50 in late 2025. At the same time, GDP growth was approximately 0.8% in 2025, with only a modest rebound expected in 2026.

But maybe the most concerning news for Mexico’s continued success as a major US importer comes from our annual Reshoring Index survey. When asked if Liberation Day tariff policies changed their view on nearshoring, more than half of respondents (55%) said the tariff policies made nearshoring less attractive. Only 27% still see an important role for nearshoring and 18% profess they’ll be taking a wait-and-see approach. Add to that the aforementioned weakening investment confidence in Mexico and the elevated uncertainty about USMCA, and future nearshoring growth is likely to be uneven rather than a clean, compounding trend.

[Kearney authors: Patrick Van den Bosshche, Partner, Washington, D.C.; Horacio Leal, Principal, Mexico City; Karthik Rai, Consultant, Chicago]

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