U.S. manufacturing has declined sharply over the past 25 years as companies moved production abroad for cheaper labor and stronger supplier networks. The U.S. lost a quarter of its manufacturing plants between 1997 and 2022, while jobs fell from nearly 20 million to 12.7 million, according to McKinsey. The North American Free Trade Agreement and China’s 2001 entry into the WTO enabled U.S. companies to shift production abroad. Cheaper labor, weaker regulations, and strong supplier networks in China and Vietnam made overseas manufacturing highly attractive. Most firms cite high U.S. labor costs, averaging $35 per hour versus $4 in China and $1.30 in Vietnam, as a barrier to reshoring. Economists note that while tariffs and subsidies may support select sectors, rebuilding broad U.S. manufacturing capacity faces steep economic and logistical challenges.
