U.S. manufacturing is at a turning point. With the One Big Beautiful Bill Act (OBBBA) and current tariff pressures, the game has changed for manufacturers with global supply chains.
Some manufacturers are diving headfirst into domestic capacity, but many others are stuck, uncertain how to respond to a rapidly evolving landscape. This is especially true for small businesses that don’t have the resources to analyze their options. The U.S. Chamber of Commerce estimated that the country has about 236,000 small-business importers—those with fewer than 500 employees. In 2023, the goods they bought from abroad were worth more than $868 billion. They now face a combined annual tariff hit of $202 billion.
Policy as a Catalyst for Change
The OBBBA is a gamechanger for American manufacturing. Here’s what it includes:
- Immediate 100 percent expensing for new equipment, factories, and R&D.
- Easier financing with relaxed interest deduction limits.
- Special tax incentives for reshoring and domestic production, especially in defense and semiconductors.
- Restrictions on “prohibited foreign entities,” making firms rethink their supply chains.
Along with aggressive tariffs, these policies have made offshore manufacturing increasingly unpredictable and costly, while making domestic production more appealing.
The Investment Surge—and the Hesitation
Big companies are making bold moves. Johnson & Johnson invested $55 billion in U.S. manufacturing and R&D. Eli Lilly doubled its U.S. investment to $50 billion to build four new manufacturing sites. GE Appliances is putting $3 billion into domestic production, and Century Aluminum is planning a $50 million upgrade to its South Carolina plant.
Yet, for every company making headlines, there are thousands more grappling with uncertainty. One CEO of a machine tool company told me that economic uncertainties are causing their customers to delay investments. An operations VP complained about yet another scenario-planning exercise to assess tariff impacts.
Reshoring is costly. Building new capacity takes years. And the risks—like labor shortages, infrastructure gaps, regulatory hurdles—are very real.
Why Many Manufacturers Are Stuck
The hesitation is understandable. Manufacturers have a lot to consider:
- Where to invest? Domestic, nearshore (e.g., Mexico), or friend shore (e.g., India, Vietnam)?
- How to finance expansion? Even with tax incentives, capital costs are high.
- How will my competitors respond? Will they hold prices, adding margin pressure?
- What to prioritize? Speed to market, cost control, compliance, innovation?
A Plan for Moving Forward
If you’re looking for clarity, here’s a framework to consider:
- Assess tariff exposure: Calculate the cost impact of current and potential tariffs (worst and most likely case) on your supply chain.
- Map supply chain vulnerabilities: Identify exposure to high-risk (probability and impact) regions.
- Explore alternatives: Find different sourcing and manufacturing expansion options to reduce supply chain risks.
- Model ROI scenarios: Use enhanced expensing and tax credits to estimate ROI for different reshoring strategies.
- Evaluate incentives: Look into federal, state, and local programs that support domestic investment.
- Determine trigger points: Work with industry experts and financial advisors to identify trigger points and proactive responses.
The Cost of Inaction
The reshoring-nearshoring-friendshoring trend is no longer theoretical. It’s a strategic imperative. Companies that act now will shape the future of American manufacturing. Those that wait risk falling behind, losing market share, and potentially losing their business.
As leaders, we must move beyond analysis paralysis and embrace bold, informed action. The picture isn’t totally clear, but the direction is.
August 20, 2025
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