The political appeal of reshoring is undeniable. Bring the factories home, create good jobs, reduce dependence on rivals. It sounds like economic sovereignty wrapped in a jobs program.

But the economic reality is far messier than the campaign slogans suggest. Decades of offshoring didn't happen because corporations hate their home countries—it happened because of fundamental differences in cost structures, regulatory environments, and workforce availability that don't disappear when political winds shift.

Understanding these trade-offs isn't about defending offshoring or dismissing security concerns. It's about recognizing that supply chain policy involves genuine choices between competing goods—and pretending otherwise leads to policies that achieve neither economic efficiency nor strategic resilience.

The labor cost differential between developed and developing economies remains substantial, even as wages rise in manufacturing hubs like China and Vietnam. American manufacturing workers earn roughly $25-30 per hour in total compensation. Their counterparts in Mexico earn $4-6, in China $6-8, and in Vietnam $3-4.

But labor is only part of the story. Regulatory compliance costs—environmental standards, workplace safety requirements, permitting processes—add 15-25% to production costs in developed economies. These regulations exist for good reasons, but they represent real competitive disadvantages that don't vanish through wishful thinking.

Energy costs compound the challenge. Despite cheap natural gas in America, electricity prices for industrial users remain higher than in many Asian manufacturing centers. Factor in real estate costs, local taxes, and the accumulated infrastructure advantages of existing production clusters, and the math becomes daunting.

Consumer price implications are significant. Studies of potential iPhone manufacturing in America suggest retail prices would increase 30-40%. For everyday goods—clothing, electronics, household items—reshoring could mean meaningful increases in household expenses. These costs fall hardest on lower-income families who spend larger proportions of their budgets on manufactured goods.

Takeaway

Cost advantages aren't corporate greed—they reflect real differences in wages, regulations, and infrastructure that took decades to develop and won't reverse through policy announcements.

Perhaps the most underappreciated barrier to reshoring is human capital. Manufacturing employment in America peaked in 1979 at 19.5 million workers. Today it's around 13 million—and the nature of those jobs has transformed dramatically.

Modern manufacturing requires workers who can operate computerized equipment, interpret data, maintain sophisticated machinery, and adapt to rapidly changing production requirements. The vocational training infrastructure that once produced these workers has atrophied over four decades of declining manufacturing employment.

Germany offers an instructive contrast. Its dual-education system—combining classroom instruction with paid apprenticeships—maintains a steady pipeline of skilled manufacturing workers. Building equivalent systems takes 10-15 years of sustained investment in community colleges, apprenticeship programs, and industry partnerships.

The demographic dimension is equally challenging. Existing skilled manufacturing workers are aging rapidly, with average ages in many sectors approaching 50. Young workers have been steered toward college education rather than trades for decades. Changing these cultural patterns and educational pipelines represents generational work, not a policy cycle accomplishment.

Takeaway

Workforce development operates on decade timescales—you can build factories in months, but rebuilding the human infrastructure to staff them takes a generation.

Given these constraints, more nuanced approaches are emerging. Nearshoring—relocating production to geographically proximate allies like Mexico—captures some resilience benefits while maintaining cost advantages. Supply chain distances shorten, political risks reduce, but fundamental economics remain manageable.

Friendshoring extends this logic to geopolitical alignment. Concentrating production among democratic allies may cost more than pure offshoring but less than full reshoring. The challenge lies in defining who qualifies as a 'friend' when economic interests diverge from security partnerships.

Strategic stockpiling offers another partial solution. Rather than reshoring production of critical goods, governments can maintain reserves—semiconductors, medical supplies, rare earth elements—that buffer against supply disruptions. This approach costs far less than domestic production while providing genuine resilience.

The most promising strategies combine these elements based on genuine risk assessment. Truly critical inputs—advanced semiconductors, certain pharmaceuticals—may warrant expensive domestic capacity. Most manufactured goods don't require such costly insurance. Distinguishing between the two requires strategic clarity that political debates often lack.

Takeaway

Resilience doesn't require self-sufficiency—strategic diversification across trusted partners often achieves security goals at a fraction of the cost.

Supply chain reshoring involves real trade-offs between security, efficiency, and consumer welfare. Acknowledging these trade-offs isn't defeatism—it's the foundation for policies that might actually work.

The most effective approaches will likely combine selective domestic capacity for genuinely critical goods, diversification across allied nations for important but less strategic products, and continued global integration for everyday consumer goods.

Political rhetoric that promises painless reshoring does voters a disservice. The choices are real, the costs are substantial, and pretending otherwise produces policies optimized for applause lines rather than actual resilience.