This turbulent year has brought sweeping changes, challenges and incentives for companies worldwide—especially when it comes to tariffs. Following “Liberation Day” on April 2, when US President Donald Trump imposed a 10% tariff on nearly all foreign imports, businesses scrambled to re-evaluate their supply chains in light of higher costs and fluctuating rates.
Strategies include diversifying manufacturing locations and sourcing of raw materials, even reshoring certain operations away from China. At their peak, US duties on Chinese goods surged to 145%. Though those tariffs have since eased to 30%, multinationals are continuing to look at their options and make plans to future-proof their bottom lines.
Supply Chain Shake-Up: Who’s Moving and Why?
In the last few months, dozens of major multinational companies have shared plans in response to tariffs and other shifting dynamics in their sector and the overall economy. Noteworthy developments include:
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HP plans to move 90% of its production out of China by end of fiscal 2025 in response to trade tensions, risk of tariff on Chinese imports. The company is also stockpiling inventory and planning to cut 2,000 jobs amid tariff uncertainties.
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Apple prepares to shift all US-sold iPhone production from China to India by end of 2026, aiming to double output in India to 80 million units amid trade war and tariff concerns. The tech giant reportedly sells about 60 million phones in US per year.
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Mattel will increase some toy prices to offset tariffs. With China making up 40% of its output, the toymaker plans to shift production of 500 items this year from China to other countries.
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Nike expects US tariffs to add US$1B to costs, as China currently accounts for 16% of its US-bound shoe imports. The athletic footwear titan plans to cut that figure to high single digits by May 2026 by shifting production to other countries.
Companies that have announced plans to move production, build new manufacturing sites or expand existing sites in North America include:
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Automotive: BMW, Honda, Hyundai, Volvo, Stellantis
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Pharmaceuticals: Eli Lilly, Johnson & Johnson, Merck, Roche, Novartis, Sanofi
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Food & Beverage: Ferrero, Barry Callebaut, Chobani, Anheuser-Busch, JBS
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Toys: Lego, MGA Entertainment
Can Tariffs Truly Bring Back American Jobs?
Trump intended the tariffs to incentivize companies to bring operations back to the US. In the aforementioned case with Apple, Trump criticized the company’s plan to shift some of its iPhone production from China to India, noting the tech company should be “upping their production in the United States.”
However, reshoring is not as straightforward as it might seem. Though the World Economic Forum survey of economists found that 91% expect multinationals to restructure their supply chains, a Wells Fargo report found that it would require $2.9 trillion in capital expenditures and 6.7 million new workers for US manufacturing jobs to return to its 1979 peak.
Tariffs may spur some reshoring, but not much, according to the American Enterprise Institute, a conservative think tank. Companies that return operations face higher labor and input costs, and will likely turn to automation to offset those expenses. That’s a sentiment echoed by toymaker MGA Entertainment CEO Isaac Larien, who said that even if it could build a new factory in the US, robots would be doing 90% of the work.
For toymaker Basic Fun! CEO Jay Foreman, the instability of our tariff policy actually motivates him to stay put. "The way the tariffs are rolling out now, it doesn't seem like there's much of advantage to move from where you are," explains Foreman in an interivew. "If you're in a place where you're comfortable with the manufacturing process and the cost of goods, you're probably going to stay there."
Nevertheless, companies exploring the possibility of building a new factory in the US or moving production back to American shores could receive government incentives to do so.
Government's Helping Hand: Incentives for Onshoring
On July 4, President Trump signed One Big Beautiful Bill into law, introducing substantial incentives for manufacturers investing in domestic operations. The new law allows companies to fully expense, until January 1, 2029, their investments in US production facilities immediately instead of amortizing these capital expenditures over a number of years. To qualify, facility construction needs to start on or after January 19, 2025, and the facility needs to be in service before January 1, 2031. Businesses can also deduct domestic R&D expenses fully in the year incurred. These incentives aim to improve the cash flow of companies that incur large upfront investment costs.
Other federal bills introduced this year supporting reshoring or domestic production include:
- Electronics: US HB3597 provides incentives for domestic production and acquisition of printed circuit boards and integrated circuit substrates in the US
- Food & Beverage: US HB2008 encourages US production of infant formula through tax credits for domestic manufacturing projects
- Manufacturing: US HB2652 encourages manufacturing relocation to the US with tax incentives, permanent full expensing, and exclusions on property sale gains
- Mining: US HB1496 establishes a tax credit for domestic production of high-performance rare earth magnets, with phased-out benefits after 2034
- Pharmaceuticals: US SB1891 establishes a tax credit for producing generic drugs and biosimilars in the US, including increased credits for domestic content and phased-out credits after 2033
- Supply Chain: US HB1328 establishes a tax credit for reshoring investments in critical supply chains, excluding certain foreign entities and supporting essential industries such as pharmaceuticals and semiconductors
States are also rolling out their own red carpet for domestic manufacturers:
- Nebraska (NE LB265): Passed and approved by the Governor on June 6. This bill adopts the Manufacturing Modernization Act, providing grants for smart technology investments.
- Maine (ME LD1951): Passed and enacted on June 25. This bill promotes the expansion of food manufacturing and job creation through tax credits and other financial incentives.
- New Jersey (NJ A5687): Passed both houses and enrolled on June 30, awaiting gubernatorial action. This bill establishes the "Next New Jersey Manufacturing Program" to incentivize in-state manufacturing investments and job creation, targeting advanced manufacturing and sustainable energy sectors.
- Pennsylvania (PA HB1575): Re-committed to House Appropriations on July 1. This bill aims to incentivize revitalizing vacant factory or mill buildings for economic use.
- Pennsylvania (PA HB1556): Referred to House Finance on June 17. This bill introduces tax credits for advanced clean manufacturing, targeting clean steel, aluminum, cement, and energy efficiency projects.
- Illinois (IL SB1620): Re-referred to Assignments on June 2. This bill proposes a tax credit for manufacturing capital expenditure, with higher credits for rural or economically challenged areas.
From Legislation to Corporate Strategy: How to Stay Ahead?
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