Reorientation, Not Reshoring: What a Year of Tariffs Did to Auto Supply Chains
One year into the tariffs, auto supply chains are reorganizing, but they aren’t coming home. Both imports and domestic production fell together in 2025, and the apparent drop in import penetration reflects a shrinking market, not a manufacturing revival. The data tells a clear story: reorientation, not reshoring.
One year into the tariffs, supply chains are reorganizing. They aren’t coming home.
In our May 2026 survey, we asked automotive leaders where they stood on reshoring, on a scale running from evaluating to completed. Roughly 2% reported it complete. 38% weren’t considering it at all. The rest sat in evaluating, planning, or early implementation. Our analysis of automotive-sector financial disclosures shows talk of reshoring and nearshoring up 23x since 2019.
Morgan Stanley reached the same conclusion from the macro data. We have had more than a year of widespread tariffs. They looked for evidence that production had returned to the US, but did not find it. Import penetration (the share of the market’s demand that is met by imports rather than domestic production) for all goods rose to 33.6% by December 2025, up from 32.8% a year earlier; durable goods climbed to 43.5% from 42.7%.
Their verdict was that reorientation of supply chains is greater than reshoring. The automotive picture, in real terms, says the same thing more sharply.
For the automotive sector, import penetration sat around 44% throughout 2024, and fell to 39.6% in Q4 2025. The share fell because imports collapsed under the tariffs and the market itself shrank, not because domestic production rose to fill the gap. In 2025, under the full weight of the tariffs, both imports and domestic production fell together: real output down 1.3% compared to 2024, real imports down 10%.
After stripping out inflation, real domestic output of vehicles and parts is up 2.2% since 2019, and real output tracks real imports almost exactly: real output and imports are tightly correlated1, rising and falling in step. Most pertinently, domestic output in the automotive sector has not risen to fill the space left by falling imports, which is exactly what reshoring would look like in the data.
The import mix tells the same story. Auto imports fell 13% in 2025, and they fell from every major source: Mexico down 6%, Canada down 8%, Japan down 11%, South Korea down 16%, Germany down 20%, China down 25%. Not one major nation grew its share in the US market.
The one shift worth noting is a relative one. Even though imports fell across the board, North America’s share of auto imports rose from 41% to 44%. The rest of the world just fell faster, by about 18% in comparison to Mexico and Canada’s collective 7%. The tariffs hit distant suppliers hardest and the integrated North American base least. That is reorientation toward the lowest-tariff, most-connected suppliers inside a shrinking total, with no sign yet of production coming home.
The May numbers confirm what our survey base signaled more than a year ago. Back in December 2024, when we asked how operational footprints would shift, the answer was not expansion. A plurality of respondents expected to shrink or consolidate, and in the US specifically, consolidation intent ran well ahead of growth. The drivers were underutilized factories from soft demand, and tariffs that made the current footprint undesirable and uncertain. Where leaders did see opportunity, they pointed away from the US industrial Midwest, with Mexico drawing the most optimism.
Policy uncertainty makes delay the rational choice. Footprint decisions run on a multi-year horizon; and an announcement comes in the form of a press release. Reshoring means a qualified supplier base, a hired skilled-trades workforce, and access to utilities.
Only 8% of the leaders we surveyed expect a clean USMCA extension. A target that keeps moving is a reason to wait rather than build, and our respondents have tied their capital-expenditure delays directly to that uncertainty, deferring program launches, new equipment, and new facilities through 2026.
Waiting to build is not the same as doing nothing. The OEMs have reacted where they can. Most are pursuing local-for-local, reducing China dependency while accepting that full independence is not available. Jim Farley has declared the era of the auto industry as a global business over, with localization accelerating. The intent is there; the capability is the constraint. Under new policy regimes, nearshoring may well be a strategic imperative. But there is an execution bottleneck – and until it clears, the data will keep showing reorientation, not reshoring.
