Facing tariff pressures: The challenges and strategies behind U.S. companies’ moves to nearshoring and reshoring

With the upcoming return of the Trump administration and the expectation of increased tariffs on imports, U.S. companies are rethinking their global supply chain strategies.

Many are already exploring or executing plans to bring manufacturing closer to North America, a shift that could lead to significant changes in supply chain structures and business operations. This potential wave of “friendshoring,” “nearshoring,” and reshoring efforts aims to reduce reliance on China, where tariff risks are highest. However, these transitions are not without complexity and could affect everything from infrastructure to labor availability, raising key questions about how quickly and efficiently companies can adapt.

How moving manufacturing closer adds complexity

Shifting manufacturing to the U.S. or nearby countries adds new layers of complexity to supply chains. For one, moving production requires extensive restructuring across sourcing, logistics, and compliance. While nearshoring can reduce exposure to tariffs and geopolitical risks, it also brings challenges such as limited infrastructure and production capacity in certain regions. For example, some nearshoring options may lack the mature manufacturing ecosystems that companies have relied on in China, resulting in unexpected bottlenecks or quality concerns. Beyond infrastructure, sourcing skilled labor and retraining local workforces add costs and can impact production timelines. From a regulatory perspective, companies may need to navigate new standards and compliance requirements, which adds more layers to manage within their supply chains.

Addressing infrastructure gaps in new manufacturing hubs

Several companies have already begun shifting portions of their production out of China, a strategy that could benefit those transitioning away from high-tariff regions. These early movers are helping to establish new manufacturing, logistics and trade networks, showing the way for companies that follow. A phased transition would help distribute the challenges over time, allowing businesses to tackle risks in waves rather than all at once. However, this early shift has exposed critical infrastructure gaps in regions such as Southeast Asia and Latin America, where transportation, warehousing, and supplier reliability may not yet match the efficiency of China’s supply network. For companies with complex supply chains, from automotive to electronics, these early moves highlight the need for substantial investment in regional infrastructure to support future growth and minimize potential production delays.

Strategies to mitigate infrastructure challenges

From a supply chain perspective, the readiness of infrastructure is one of the biggest challenges in moving away from China. China’s robust and highly integrated network of logistics, manufacturing, and skilled labor has taken decades to build and is difficult to replicate quickly elsewhere. While nearshoring, or friendshoring locations such as Vietnam, offer promising alternatives, they lack the same depth and scale, particularly for industries with specialized production needs. This disparity in infrastructure can impact delivery timelines, costs, and production stability. For a successful transition, companies must be prepared to invest not only in new networks and partnerships but also in building the capabilities and technology that support a resilient supply chain for the long term.