Accessible version Global Economic Viewpoint Battle of the Titans: Reshoring vs Friendshoring What questions drive reshoring/friendshoring trends? Will tariffs and geo-fragmentation drive manufacturing back into the US? Or, will companies prefer near-/friendshoring instead? What are its main drivers and how long can relocation take? Will companies absorb tariffs or pass through to prices? To analyze the impact of the tariff war, we completed a proprietary survey of 56 analysts, based on 9 countries, coverin ...

Core Insights - Large organizations in Europe and the US are prioritizing reindustrialization investments to address supply chain pressures, rising tariffs, and trade disputes, focusing on long-term strategies over short-term profitability [2][4][5] Reindustrialization Strategies - Approximately 60% of executives are committed to reindustrialization efforts despite increased costs, with 65% reducing reliance on Chinese products and planning to invest in 'friendshoring' over the next three years [2][10] - Two-thirds of organizations have an active or in-progress reindustrialization strategy, an increase from 59% in 2024 [3] Drivers of Reindustrialization - Supply chain resilience (95%) and proximity to customers (92%) are the top drivers for reindustrialization, with rising tariffs being a significant concern for 93% of executives [5][6] - More than half of executives in key sectors view tariffs as a catalyst for reshoring and reindustrialization efforts [6] Investment Trends - Cumulative investments in reindustrialization are projected to reach $4.7 trillion over the next three years, up from $3.4 trillion in 2024 [8] - Over half of organizations have invested in nearshoring or reshoring, with 35% planning to increase nearshoring investments in 2025 [8][9] Manufacturing Capacity Changes - Onshore and nearshore operations are expected to account for 48% and 24% of total manufacturing capacity, respectively, in the next three years [9] - 'Friendshoring' is anticipated to account for 41% of total manufacturing capacity, increasing from 37% in 2024 [10] Technological Advancements - 62% of organizations are focusing on upgrading manufacturing facilities with advanced technologies, with over half achieving more than 20% cost savings through digital technologies [11] - Critical technologies such as data analytics and AI/Machine Learning are being prioritized to support reindustrialization efforts [12] Sustainability Focus - 73% of organizations believe reindustrialization will promote sustainable and eco-friendly manufacturing practices, a significant increase from 56% in 2024 [13]