The Q3 2025 Domestic Market Share Index (DMSI) rebounded to 65.6%, reversing the sharp Q1 decline.
The overall DMSI increased 3.5% from Q1 to Q3 2025, marking a clear post-tariff recovery.
Sectors covered by Section 232 tariffs led the gains, including Primary Metals (+21.0%) and Motor Vehicles (+4.8%).
The largest market share decline occurred in Computers and Electronics (-4.4%), driven by surging AI-related import demand.
Sector-level dynamics show tariffs are reshaping supply chains—but capacity gaps remain in strategic industries.
Tariff Policy Is Starting to Reverse the Pre-Tariff Collapse
The CPA Domestic Market Share Index (DMSI) has rebounded sharply in 2025, signaling that U.S. tariffs are beginning to restore domestic production’s share of the American market.
Figure 1: Domestic Market Share Index (DMSI) (2005-2025)
Source: U.S. Bureau of Economic Analysis, U.S. Census; CPA Calculations Note: Blue line reflects quarterly data. Green line reflects four-quarter moving average.
After collapsing to 62.1% in Q1 2025 due to pre-tariff stockpiling, the DMSI has recovered to 65.6% in Q3 2025, a 3.5% increase in just two quarters.
Q1 2025 marked a temporary low point for domestic market share, driven by heavy import front-loading ahead of tariffs. The index rebounded in Q2 and rose again in Q3, surpassing Q4 2024 levels and signaling a broader recovery trend. As tariffs took effect and imports normalized, domestic producers began reclaiming market share.
This is the clear early evidence that tariffs are beginning to actively reallocate market share back to U.S. industry.
Section 232 Industries Are Leading the Recovery
The domestic market share recovery is being driven by sectors covered under Section 232 tariffs, which target critical industries on a national security basis and impose durable, sector-specific constraints on imports that support domestic production. From Q1 to Q3 2025, two key Section 232 sectors led the recovery, with Primary Metals surging 21.0% and Motor Vehicles and Parts increasing 4.8%.
Figure 2: DMSI Change by Manufacturing Sector (2025 Q3)
Manufacturing Industries
25Q1-25Q3 DMSI Change
Primary Metals
21.0%
Chemical Products
10.6%
Motor Vehicles, Bodies and Trailers, and Parts
4.8%
Miscellaneous Manufacturing
4.4%
Furniture and Related Products
3.6%
GRAND TOTAL
3.5%
Machinery
3.2%
Other Transportation Equipment
1.8%
Fabricated Metal Products
1.1%
Textile Mills and Textile Product Mills
0.9%
Wood Products
0.9%
Paper Products
0.7%
Food and Beverage and Tobacco Products
0.7%
Plastics and Rubber Products
0.6%
Electrical Equipment, Appliances, and Components
0.6%
Nonmetallic Mineral Products
-0.2%
Printing and Related Support Activities
-1.0%
Petroleum and Coal Products
-1.3%
Apparel and Leather and Allied Products
-1.8%
Computer and Electronic Products
-4.4%
Source: U.S. Census, U.S. Bureau of Economic Analysis, CPA Calculations
Primary Metals represents the clearest case of tariff effectiveness. The sector experienced one of the steepest losses during the pre-tariff import surge, with its trade deficit jumping from $25.9 billion in Q4 2024 to $84.9 billion in Q1 2025, a 227% increase. That surge has since reversed following the Trump Administration’s increase in steel and aluminum tariffs to 50% [1], with domestic producers now rapidly reclaiming market share. In total, U.S. primary metals gross output increased by $3.3 billion from Q4 2024 to Q3 2025 (up 4.3%), and imports fell by $2.9 billion (down 6.6%).
Motor Vehicles and Parts are also recovering, though more gradually. The sector’s 4.8% market share gain reflects tariff-driven supply chain adjustments, as automakers shift production and sourcing toward North America to mitigate import costs. Total quarterly gross output increased by $15.3 billion from Q1 to Q3 2025 [2], an 8.1% rise, reinforcing the sector’s underlying momentum. Recent investment announcements, including Mercedes-Benz’s $4 billion expansion of its Alabama plant and the relocation of high-volume models like the GLC SUV to U.S. production [3], point to a broader industry pivot toward domestic manufacturing. These kinds of investments are expected to increase domestic utilization and support further market share gains over time.
In both cases, the mechanism is clear: Section 232 tariffs reduce import penetration, increase domestic utilization, and shift market share back to U.S. production.
These gains are not limited to Section 232 industries. Several adjacent sectors are also benefiting as supply chains adjust and domestic demand strengthens. Chemical Products increased 10.6%, Machinery rose 3.2%, Miscellaneous Manufacturing gained 4.4%, and Furniture increased 3.6% from Q1 to Q3 2025. Notably, furniture has since been brought under Section 232 tariff coverage through the Administration’s action on timber, lumber, and derivative wood products [4], reinforcing the broader shift toward sector-based tariff enforcement. This reflects ongoing supply chain realignment, as higher domestic production in protected industries drives demand across upstream and downstream sectors.
The sharpest decline in domestic market share occurred in Computers and Electronics (-4.4%). This does not reflect a decline in U.S. production but rather demand outpacing capacity.
The primary driver is that U.S. production is not expanding fast enough to keep pace with a surge in AI-driven demand. Data center and AI-related investment accounted for roughly 80% of U.S. private domestic demand growth in the first half of 2025, reflecting a rapid buildout in data centers, semiconductors, and advanced computing systems [5]. This surge has translated directly into increased import reliance, as domestic manufacturing capacity in key high-tech segments has not yet scaled to meet the pace of expansion.
From Q1 to Q3, U.S. Computers and Electronics gross output increased by $3.3 billion (3.1%), while imports rose by $26.5 billion (17.2%). As a result, even as total demand expands, a growing share is being met through imports, pulling down the sector’s domestic market share.
This is a fundamentally different dynamic than traditional import displacement. Imports are rising not because U.S. production is declining, but because the industrial base has not yet scaled to meet a strategic demand surge, despite new investments such as TSMC’s Arizona facility [6].
In these critical technology sectors, tariffs and industrial policy must operate together to expand domestic capacity at the same pace as demand. Without that alignment, import dependence will continue to rise even during periods of strong domestic growth.
While some recent gains show momentum, the overall level of domestic market share across sectors reveals a fundamental divide in the U.S. industrial base.
At the high end, several industries remain overwhelmingly domestic, including Printing (92.6%), Petroleum and Coal (89.4%), and Wood Products (87.2%). These sectors are more geographically anchored or resource-based and have largely avoided import displacement.
A middle tier—including Primary Metals (54.2%), Machinery (56.0%), Motor Vehicles (65.2%), and Chemical Products (66.3%)—represents the core of U.S. industrial capacity. These sectors are exposed to imports but retain significant domestic production capacity to respond quickly to tariffs and increase production, which explains their strong recent gains.
Figure 3:
At the low end, structurally import-dependent industries remain deeply eroded. Computers and Electronics (15.2%) and Apparel (8.1%) rely overwhelmingly on foreign production. The recent decline in electronics market share reflects not just import competition, but surging demand that domestic manufacturing cannot yet meet.
Trade Deficits Still Define the Competitive Landscape
Despite the improvement in domestic market share, the U.S. manufacturing trade balance remains deeply negative across several critical sectors.
As of Q3 2025:
Computers and Electronics: -$103.1 billion
Motor Vehicles and Parts: -$58.5 billion
Electrical Equipment: -$31.2 billion
Meanwhile, only a limited number of industries generate surpluses:
Other Transportation Equipment (driven by Boeing): +$33 billion
Petroleum and Coal: +$16.2 billion
Figure 4:
This underscores a central reality: the DMSI rebound reflects relative improvement within a still import-dependent system. The United States is regaining market share, but from a deeply eroded base. Sustaining that recovery will require expanded Section 232 coverage and consistent enforcement to rebuild domestic capacity.
Conclusion
The 2025 DMSI rebound shows that U.S. manufacturing decline is not inevitable. Production responds to effective, targeted policy. Section 232 tariffs are restoring domestic market share in key industries where capacity still exists, particularly in primary metals and motor vehicles.
However, additional policy support and industrial investment are needed in critical sectors where capacity lags demand. Industries such as electronics, which have been hollowed out by decades of import dependence, require targeted strategies to rebuild production and capture growing demand.
Tariffs are restoring market conditions, but sustained recovery will require rebuilding capacity in strategic industries alongside consistent enforcement.
Methodology
The CPA Domestic Market Share Index (DMSI) measures the success of U.S. manufacturing producers in the U.S. market. Over the past two decades, imports have gained a larger share in the U.S. market, leading to millions of lost jobs and industrial decline in many regions and many sectors.
The DMSI is based on the value of production, imports, and exports in U.S. manufactured goods. It is calculated entirely from U.S. government data as the inverse of the import share: DMSI = 100 × (1 − (Imports / (Output + Imports − Exports))).
Changes in the reported annual and quarterly DMSI reflect revisions in government data. For more detailed information on the DMSI including downloadable data, please contact arechenberg@prosperousamerica.org.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
Domestic Market Share Rebounds in 2025 as Sec. 232 Tariffs Begin to Reshape U.S. Manufacturing
KEY POINTS
Tariff Policy Is Starting to Reverse the Pre-Tariff Collapse
The CPA Domestic Market Share Index (DMSI) has rebounded sharply in 2025, signaling that U.S. tariffs are beginning to restore domestic production’s share of the American market.
Figure 1: Domestic Market Share Index (DMSI) (2005-2025)
Source: U.S. Bureau of Economic Analysis, U.S. Census; CPA Calculations
Note: Blue line reflects quarterly data. Green line reflects four-quarter moving average.
After collapsing to 62.1% in Q1 2025 due to pre-tariff stockpiling, the DMSI has recovered to 65.6% in Q3 2025, a 3.5% increase in just two quarters.
Q1 2025 marked a temporary low point for domestic market share, driven by heavy import front-loading ahead of tariffs. The index rebounded in Q2 and rose again in Q3, surpassing Q4 2024 levels and signaling a broader recovery trend. As tariffs took effect and imports normalized, domestic producers began reclaiming market share.
This is the clear early evidence that tariffs are beginning to actively reallocate market share back to U.S. industry.
Section 232 Industries Are Leading the Recovery
The domestic market share recovery is being driven by sectors covered under Section 232 tariffs, which target critical industries on a national security basis and impose durable, sector-specific constraints on imports that support domestic production. From Q1 to Q3 2025, two key Section 232 sectors led the recovery, with Primary Metals surging 21.0% and Motor Vehicles and Parts increasing 4.8%.
Figure 2: DMSI Change by Manufacturing Sector (2025 Q3)
Manufacturing Industries
25Q1-25Q3 DMSI Change
Primary Metals
21.0%
Chemical Products
10.6%
Motor Vehicles, Bodies and Trailers, and Parts
4.8%
Miscellaneous Manufacturing
4.4%
Furniture and Related Products
3.6%
GRAND TOTAL
3.5%
Machinery
3.2%
Other Transportation Equipment
1.8%
Fabricated Metal Products
1.1%
Textile Mills and Textile Product Mills
0.9%
Wood Products
0.9%
Paper Products
0.7%
Food and Beverage and Tobacco Products
0.7%
Plastics and Rubber Products
0.6%
Electrical Equipment, Appliances, and Components
0.6%
Nonmetallic Mineral Products
-0.2%
Printing and Related Support Activities
-1.0%
Petroleum and Coal Products
-1.3%
Apparel and Leather and Allied Products
-1.8%
Computer and Electronic Products
-4.4%
Source: U.S. Census, U.S. Bureau of Economic Analysis, CPA Calculations
Primary Metals represents the clearest case of tariff effectiveness. The sector experienced one of the steepest losses during the pre-tariff import surge, with its trade deficit jumping from $25.9 billion in Q4 2024 to $84.9 billion in Q1 2025, a 227% increase. That surge has since reversed following the Trump Administration’s increase in steel and aluminum tariffs to 50% [1], with domestic producers now rapidly reclaiming market share. In total, U.S. primary metals gross output increased by $3.3 billion from Q4 2024 to Q3 2025 (up 4.3%), and imports fell by $2.9 billion (down 6.6%).
Motor Vehicles and Parts are also recovering, though more gradually. The sector’s 4.8% market share gain reflects tariff-driven supply chain adjustments, as automakers shift production and sourcing toward North America to mitigate import costs. Total quarterly gross output increased by $15.3 billion from Q1 to Q3 2025 [2], an 8.1% rise, reinforcing the sector’s underlying momentum. Recent investment announcements, including Mercedes-Benz’s $4 billion expansion of its Alabama plant and the relocation of high-volume models like the GLC SUV to U.S. production [3], point to a broader industry pivot toward domestic manufacturing. These kinds of investments are expected to increase domestic utilization and support further market share gains over time.
In both cases, the mechanism is clear: Section 232 tariffs reduce import penetration, increase domestic utilization, and shift market share back to U.S. production.
These gains are not limited to Section 232 industries. Several adjacent sectors are also benefiting as supply chains adjust and domestic demand strengthens. Chemical Products increased 10.6%, Machinery rose 3.2%, Miscellaneous Manufacturing gained 4.4%, and Furniture increased 3.6% from Q1 to Q3 2025. Notably, furniture has since been brought under Section 232 tariff coverage through the Administration’s action on timber, lumber, and derivative wood products [4], reinforcing the broader shift toward sector-based tariff enforcement. This reflects ongoing supply chain realignment, as higher domestic production in protected industries drives demand across upstream and downstream sectors.
Electronics Decline Highlights Strategic Capacity Gaps
The sharpest decline in domestic market share occurred in Computers and Electronics (-4.4%). This does not reflect a decline in U.S. production but rather demand outpacing capacity.
The primary driver is that U.S. production is not expanding fast enough to keep pace with a surge in AI-driven demand. Data center and AI-related investment accounted for roughly 80% of U.S. private domestic demand growth in the first half of 2025, reflecting a rapid buildout in data centers, semiconductors, and advanced computing systems [5]. This surge has translated directly into increased import reliance, as domestic manufacturing capacity in key high-tech segments has not yet scaled to meet the pace of expansion.
From Q1 to Q3, U.S. Computers and Electronics gross output increased by $3.3 billion (3.1%), while imports rose by $26.5 billion (17.2%). As a result, even as total demand expands, a growing share is being met through imports, pulling down the sector’s domestic market share.
This is a fundamentally different dynamic than traditional import displacement. Imports are rising not because U.S. production is declining, but because the industrial base has not yet scaled to meet a strategic demand surge, despite new investments such as TSMC’s Arizona facility [6].
In these critical technology sectors, tariffs and industrial policy must operate together to expand domestic capacity at the same pace as demand. Without that alignment, import dependence will continue to rise even during periods of strong domestic growth.
Domestic Market Share Levels Highlight Structural Gaps
While some recent gains show momentum, the overall level of domestic market share across sectors reveals a fundamental divide in the U.S. industrial base.
At the high end, several industries remain overwhelmingly domestic, including Printing (92.6%), Petroleum and Coal (89.4%), and Wood Products (87.2%). These sectors are more geographically anchored or resource-based and have largely avoided import displacement.
A middle tier—including Primary Metals (54.2%), Machinery (56.0%), Motor Vehicles (65.2%), and Chemical Products (66.3%)—represents the core of U.S. industrial capacity. These sectors are exposed to imports but retain significant domestic production capacity to respond quickly to tariffs and increase production, which explains their strong recent gains.
Figure 3:
At the low end, structurally import-dependent industries remain deeply eroded. Computers and Electronics (15.2%) and Apparel (8.1%) rely overwhelmingly on foreign production. The recent decline in electronics market share reflects not just import competition, but surging demand that domestic manufacturing cannot yet meet.
Trade Deficits Still Define the Competitive Landscape
Despite the improvement in domestic market share, the U.S. manufacturing trade balance remains deeply negative across several critical sectors.
As of Q3 2025:
Meanwhile, only a limited number of industries generate surpluses:
Figure 4:
This underscores a central reality: the DMSI rebound reflects relative improvement within a still import-dependent system. The United States is regaining market share, but from a deeply eroded base. Sustaining that recovery will require expanded Section 232 coverage and consistent enforcement to rebuild domestic capacity.
Conclusion
The 2025 DMSI rebound shows that U.S. manufacturing decline is not inevitable. Production responds to effective, targeted policy. Section 232 tariffs are restoring domestic market share in key industries where capacity still exists, particularly in primary metals and motor vehicles.
However, additional policy support and industrial investment are needed in critical sectors where capacity lags demand. Industries such as electronics, which have been hollowed out by decades of import dependence, require targeted strategies to rebuild production and capture growing demand.
Tariffs are restoring market conditions, but sustained recovery will require rebuilding capacity in strategic industries alongside consistent enforcement.
Methodology
The CPA Domestic Market Share Index (DMSI) measures the success of U.S. manufacturing producers in the U.S. market. Over the past two decades, imports have gained a larger share in the U.S. market, leading to millions of lost jobs and industrial decline in many regions and many sectors.
The DMSI is based on the value of production, imports, and exports in U.S. manufactured goods. It is calculated entirely from U.S. government data as the inverse of the import share:
DMSI = 100 × (1 − (Imports / (Output + Imports − Exports))).
Changes in the reported annual and quarterly DMSI reflect revisions in government data. For more detailed information on the DMSI including downloadable data, please contact arechenberg@prosperousamerica.org.
References
[1] The White House, Adjusting Imports of Aluminum and Steel into the United States, June 2025. https://www.whitehouse.gov/presidential-actions/2025/06/adjusting-imports-of-aluminum-and-steel-into-the-united-states/
[2] U.S. Bureau of Economic Analysis (BEA), Gross Output by Industry. https://apps.bea.gov/iTable/
[3] Fox Business, Mercedes-Benz to Pour $4B into Alabama Plant as Tariffs Reshape U.S. Auto Strategy, 2025. https://www.foxbusiness.com/markets/mercedes-benz-pour-4b-alabama-plant-trump-tariffs-reshape-us-auto-strategy
[4] The White House, Fact Sheet: Addressing the Threat to National Security from Imports of Timber, Lumber, and Derivative Products, September 2025. https://www.whitehouse.gov/fact-sheets/2025/09/fact-sheet-president-donald-j-trump-addresses-the-threat-to-national-security-from-imports-of-timber-lumber-and-their-derivative-products-e810/
[5] S&P Global, Data Center Investments Moving the U.S. Macro Needle, November 5, 2025. https://press.spglobal.com/2025-11-05-S-P-Global-Research-Reveals-Data-Center-Investments-Moving-The-U-S-Macro-Needle
[6] Axios, TSMC Arizona Hiring and Workforce Growth, May 6, 2025. https://www.axios.com/local/phoenix/2025/05/06/tsmc-arizona-hiring-workforce-growth
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CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
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