Manufacturing News

Report: Despite trade policies, Reshoring Index continues to decline

By PR Newswire

Jul 11, 2019

A.T. Kearney's sixth annual Reshoring Index reveals that reshoring is yet to materialize on an aggregated level. U.S. gross manufacturing output grew 6% year-over-year (YOY) in 2018, but by comparison, growth in manufactured goods imports into the United States from the 14 largest LCC trading partners in Asia rose by $66 billion or 9% in 2018, the largest one-year increase since the beginning of the economic recovery. In fact, the ratio of goods imports from Asian LCCs to domestic manufacturing is the highest since the inception of the Reshoring Index.

Dramatic changes to U.S. trade policy intended to 'reshore,' or bring manufacturing home, rose to the forefront in 2018. Chief among these changes were the three rounds of like-for-like tariffs exchanged between the U.S. and China. The A.T. Kearney Reshoring Index indicates that despite these new trade and tax policies, reshoring has not seen an uptick; this is largely due to the fact that the fundamental economic advantage of manufacturing in low-cost countries remains unchanged. What has changed, however, is where imports are coming from within the group of traditional low-cost trading partners.

"Rather than incentivizing companies to reshore, the trade war with China has simply accelerated an already ongoing shift toward manufacturing in lower-cost countries such as Vietnam," said Patrick Van den Bossche, A.T. Kearney partner and co-author of the study. The A.T. Kearney China Diversification Index (CDI) was introduced to this year's study to quantify this shift. "The CDI indicates that China's role as "the factory of the world" is changing faster than anticipated," stated Brooks Levering, A.T. Kearney partner and co-author of the study.

To learn more, read "Reshoring Index Declines Again Despite America's New Trade Policies" from PR Newswire.

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