In late 2025, many U.S. manufacturers are making a pretty clear choice: they’re going to raise prices rather than rush production back to the United States to dodge tariffs. That’s one of the big takeaways from the Institute for Supply Management’s new supply chain forecast, which surveyed industry leaders about how they’re responding to the wave of import duties hitting everything from steel to electronics parts.
At its core, the situation is simple but frustrating for companies: tariffs increase the cost of imported components, and those costs get passed down to buyers. Roughly a third of manufacturers said they plan to pass all tariff-related cost increases straight into sales prices, and another 42% said they’ll split the difference, hiking prices while shouldering some pain in their own margins. Only a small handful, about 6% said tariffs aren’t affecting their costs at all. Altogether, 86% of firms expect to raise prices to cover higher input costs, and raw materials alone jumped about 5.4% in 2025, with more increases expected in 2026.
You might think that would mean a big wave of “reshoring,” bringing production back to the U.S. to avoid tariff bills, but that’s not what most manufacturers are planning. Only about 36% of companies said they’re actively looking to shift production domestically. For many, moving factories isn’t just a matter of deciding where to produce; it involves huge upfront investments, long planning cycles, and higher wage costs. A lot of firms are instead diversifying their supply chains, looking to source from countries with lower tariff impacts or simply keeping production where it already is because that remains cheaper overall.
Economists and industry analysts say this pattern makes sense when you look at the bigger picture. Tariffs can raise prices for both manufacturers and consumers alike, contributing to inflationary pressure in consumer goods and materials. Research suggests that tariff increases like the ones implemented in 2025 do lead to higher prices on imported goods and can push up measures like the Consumer Price Index. They can also disrupt deeply integrated global supply chains, making planning harder for businesses that rely on complex just-in-time components.
That uncertainty is part of why companies have hesitated on big decisions like building new U.S. plants. Policy whiplash, where tariff rates, exemptions, and trade negotiations shift frequently, makes executives cautious about sinking capital into long-term projects that might suddenly lose their economic rationale. Studies of reshoring efforts also point out that tariffs alone aren’t enough to justify moving production when labor costs in the U.S. are significantly higher than in many offshore locations.
Still, it’s not all doom and stagnation. Some sectors have seen early positive signs that reshoring or at least repatriation of specific critical industries is gaining traction. For example, certain pharmaceutical and advanced manufacturing investments have been announced that they would expand domestic capacity, partly driven by national security concerns. And some observers note that tariffs may create a longer-term incentive for companies to rethink where they make things, even if the near-term spike in reshoring hasn’t materialized yet.
For now, manufacturers are taking a measured approach. They’re bracing for continued tariff costs and passing much of that onto customers, while watching policy developments closely, including ongoing legal challenges to tariff authority in the Supreme Court. Many business leaders express cautious optimism that a clearer long-term trade policy could help reduce uncertainty and support more decisive investment in U.S. facilities.
In practical terms, that means you’re likely to see higher prices on a range of goods as companies navigate these new cost structures. But don’t expect a sudden boom in reshoring production just yet; the economics still favor a slower, more strategic shift rather than a wholesale move back to American soil.
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