Hi Model-Based Manufacturing Enthusiast,
Happy New Year! As 2025 closed, U.S. manufacturing delivered a complex performance marked by ongoing resilience amid persistent headwinds. We reviewed the latest reports from Manufacturing Dive, the Reshoring Initiative, and U.S. manufacturing PMI data.
To summarize, U.S. manufacturing showed resilience amid uncertainty. Tariffs and trade pressures limited investment and slowed M&A, while PMI data reflected modest growth that softened late in the year. Reshoring intentions remain strong but slow to materialize, and companies continue to invest strategically in automation and AI.
Looking ahead, greater predictability could unlock significant capital for reshoring, technology, and advanced manufacturing initiatives.
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2025 By the Numbers: Trends that Defined the Year
Tariffs & Pricing
A projected $2.1 trillion in tariff revenue over the next decade, the largest tax increase since the early 1990s, has increased cost pressures on manufacturers and consumers.
A majority of firms are passing tariff costs to customers with roughly one-third planning to pass all increased costs through pricing.
Reshoring & Onshoring
Nearly half of responding companies cited proximity to engineering teams, lower freight and duty costs, or geopolitical risk mitigation as top reshoring drivers.
But the Kearney Reshoring Index fell in 2025, reflecting that long-term reshoring intentions are not yet translating into large-scale execution.
According to the 2025 Reshoring Survey Report, strong intent persists, but measured execution continues as firms calibrate capacity, skills, and capital allocation across domestic and global footprints.
M&A Investment
Industrial deal volume declined over 11 % year-over-year, illustrating how uncertainty curtails larger strategic bets.
Still, firms like TSMC and others plan significant U.S. capital investments, signaling targeted confidence in reshoring and capacity growth.
Workforce
Manufacturing employment ticked down year-over-year, reflecting ongoing labor market tightening and structural workforce challenges.
Read more here:
What This Means for 2026
Predictability fuels investment
Persistent uncertainty around tariffs, trade policy, and economic signals continues to restrain big capital commitments. A more predictable policy environment — and clearer signal on reshoring incentives — could act as a catalyst for accelerated investment.Workforce remains critical
Labor shortages and skills gaps will shape manufacturing competitiveness. Upskilling, apprenticeship models, better manufacturing tools, and closer ties with technical education are now fundamental to strategic planning.Tech investment accelerates capability
Automation, AI, and digital manufacturing remain high priorities, not just for efficiency but for enabling agile, data-driven production capable of responding to market and supply chain variability.
Thanks for reading the first 2026 issue of The Model-Based Manufacturer.
Let’s make this year a great one.
— The Dirac Team