First report shows strong reshoring growth in 2019
Washington. The Coalition for a Prosperous America (CPA) today launched its CPA Reshoring Index (CRI) to track the success of the U.S. manufacturing sector in meeting the demands of America’s home market. For 2019, the Index came in at 59, indicating that U.S. manufacturing production increased its share of manufactured goods consumed at home by 0.59 percent. This is the largest non-recessionary growth in reshoring since 2002. In most years since 2002, the CRI shows a negative result, indicating that imports took an increased share of U.S. manufacturing consumption.
“Capturing our home market demand is essential for the reshoring of U.S. manufacturing,” said CPA Chief Economist Jeff Ferry, one of the report’s authors. “Every nation that has achieved substantial economic growth and broadly shared prosperity—including the United States in its industrial heyday—did so by first conquering and dominating its home market. We developed the Index in order to measure and focus on precisely that goal.”
In the U.S. market, import penetration for manufactured goods has risen steadily in the last several decades. According to the CRI, import penetration worsened from 22.7 percent in 2002 to a high of 31.2 percent in 2018 before improving last year. The Index uniquely documents how U.S. manufacturers have lost market share to foreign rivals in ways that trade, employment, and output data obscure.
CPA credits the Trump administration’s tariffs and aggressive trade strategy with helping to deliver a positive Reshoring Index in 2019 after years of negative trends, since the cost of many imports rose in relation to the price of domestically produced goods. Additionally, the uncertainty of producing in China and other countries rather than at home has caused some companies to bring production back to the U.S.
CPA’s report also looked at specific manufacturing sub-sectors. The CRI found that import penetration rose the most since 2002 in the apparel sector, where 92.8 percent of U.S. consumption is served by imported goods. Advanced technology sectors also experienced a dramatic increase in import penetration, including in the computers and electrical equipment sector.
“The CPA Reshoring Index shows that we can reverse the offshoring trend with aggressive policies to benefit U.S. producers,” said Michael Stumo, CEO of the CPA. “China, Germany, and Japan are not squeamish about competing in the global race for good jobs and industries. The U.S. needs to get even more aggressive, and play to win, if we are to accelerate our recovery.”
Read more about CPA’s Reshoring Index.