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A worker rests in a factory that produces steel bike rims intended for export to the United States, located in Hangzhou, Zhejiang Province, China on April 11, 2025.
As tariffs imposed by the Trump administration begin to take effect, a recent CNBC Supply Chain Survey reveals that the anticipated reshoring of manufacturing back to the U.S. may not occur as expected. While the administration maintains that American manufacturing will see a resurgence, many companies express concern over the significantly increased costs associated with moving production.
Cost issues remain paramount, with nearly three-quarters of the survey’s participants (74%) indicating that it was the primary deterrent against reshoring. The difficulty in sourcing skilled labor was also a concern for 21% of respondents. Although there have been promises of tax benefits for companies that choose to relocate manufacturing back to the U.S., participants ranked tax considerations lower on the list of influential factors when deciding manufacturing locations.
Despite some high-profile commitments from major tech firms such as Nvidia and Apple, which plan to invest heavily in U.S. facilities, the overarching sentiment among companies remains cautious, particularly regarding tariffs imposed on technology imports from China and other nations. While a temporary reprieve on tariffs was granted last Friday, the administration continues to investigate national security concerns related to critical technology.
Many respondents estimated that establishing a domestic supply chain would more than double current costs, with 18% suggesting the expense would at least double and 47% anticipating even higher expenses. Instead of bringing operations back to the U.S., a significant 61% of respondents preferred to explore supply chain options in countries with lower tariffs.
Additional concerns identified in the survey included fluctuating consumer demand, rising raw material prices, and the unpredictable strategies of the current administration. Over half of those surveyed (61%) actually expressed feelings of intimidation from the Trump administration towards corporate interests.
The survey included feedback from 380 participants affiliated with various supply chain and business organizations, conducted from April 14-18. The respondents represented a range of groups including the U.S. Chamber of Commerce, the National Association of Manufacturers, and the American Apparel and Footwear Association, among others.
For those expressing interest in reestablishing their supply chains in the U.S., a lengthy timeline is expected, with 74% indicating that the process could extend from three to five years or longer—41% estimating at least three to five years and 33% projecting it could take extended periods beyond that.
The Role of Automation
If manufacturing returns to American soil, the integration of automation appears inevitable, with 81% of respondents predicting a shift towards mechanization over employing human workers. Mark Baxa, CEO of the Council of Supply Chain Management Professionals, highlighted concerns regarding the U.S. labor market’s capacity to accommodate a potential resurgence of manufacturing.
Job security remains precarious, with respondents almost evenly divided on their plans for workforce adjustments—47% indicating they may need to cut jobs, while 53% do not foresee layoffs at this time. A substantial number anticipate job reductions within the next nine months, while 38% expect layoffs to be necessary within a two to three-month timeframe.
A recent Federal Reserve survey underscored growing apprehensions regarding job stability in light of the tariffs. Currently, the predominant reaction to the tariffs among companies has been the cancellation of orders (89%), based on fears that consumer spending will dwindle—a prediction held by 75% of survey participants. Consequently, for products that will incur new tariff rates, 61% stated they plan to increase prices.
“The immediate consequences we are witnessing include order cancellations and a distinctly decreasing consumer spending outlook,” observed Baxa.
Survey participants identified discretionary items (44%), furniture (19%), and luxury goods (19%) as the categories most vulnerable to decreased consumer spending.
“At this moment, we are experiencing significant cancellations or pauses on freight from China, yet we see heightened volumes from other Asian countries, where their reciprocal tariffs remain suspended for 90 days,” commented Paul Brashier, vice president of global supply chain at ITS Logistics.
Preparing for Economic Shifts
A significant 63% of respondents warn that ongoing tariffs may trigger a recession within the U.S. economy this year, with about half of that group (51%) predicting its onset as early as the second quarter. Steve Lamar, CEO of the American Apparel & Footwear Association, expressed grave concerns about the adverse effects of tariffs. He stated, “The supply chains that support millions of American jobs are beginning to show signs of strain due to these tariffs, which could lead to higher prices, job losses, product shortages, and even bankruptcy. The repercussions for the U.S. economy as the administration continues this ill-fated tariff strategy may become irreversible.”
In defense of the administration, Kevin Hassett, the Director of Trump’s National Economic Council, claimed that multiple countries have put forth attractive trade proposals to the U.S. and asserted that a recession is not in the forecast.
Several surveys conducted among CEOs reflect widespread suspicions that a recession may have already commenced or is imminent. BlackRock CEO Larry Fink reported that discussions with other executives have suggested that the U.S. economy is on the brink of, or possibly in, a recession at this time.
Smaller enterprises and startups are especially anxious about the implications of tariffs, which they argue could pose significant threats to American jobs. Bruce Kaminstein, a member of NY Angels and former CEO of a cleaning products company, remarked, “Small businesses that thrived on innovation often lack the capital necessary to build new factories in the U.S. They have been compelled to relocate production overseas, where manufacturers are willing to support their efforts to reach the market.”
As retailers prepare for the back-to-school and holiday orders, data indicates that while many importers have reduced order volumes by 5% to 30%, most respondents believe that specific seasonal orders have remained unaffected. Nevertheless, a notable 75% indicate intentions to elevate prices on these sought-after seasonal products. Increased caution among consumers is reflected in the focus on more affordable goods for the holiday season (67%) and greater promotional offerings (21%), while luxury items ranked last in order planning.
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