Reshoring

Reshoring describes the strategic decision by companies or governments to bring manufacturing and service activities back to the domestic economy after they had previously been moved abroad to take advantage of lower labour costs, tax incentives, or proximity to growth markets. The term gained traction in the United States after the 2008 financial crisis, when rising Chinese wages, transport costs, intellectual-property concerns, and currency fluctuations began to erode the cost advantage of offshore production.

Drivers of reshoring typically include:

• Cost convergence: narrowing wage gaps between emerging and advanced economies.
• Supply-chain resilience: exposed by the COVID-19 pandemic (2020–2022) and shocks such as the 2021 Suez Canal blockage and semiconductor shortages.
• Geopolitical risk: US–China trade tensions from 2018 onward, including Section 301 tariffs imposed under the Trump administration and maintained under the Biden administration.
• Industrial policy: subsidies and tax credits, notably under the US CHIPS and Science Act (2022) and the Inflation Reduction Act (2022), as well as the EU's Chips Act (2023).
• Automation: robotics and additive manufacturing reduce the labour-cost premium of producing in high-wage economies.

Related concepts include nearshoring (relocating to a nearby country, often Mexico for US firms or Eastern Europe for German firms), friend-shoring (a term used by US Treasury Secretary Janet Yellen in 2022 to describe shifting supply chains toward allied states), and onshoring, which is sometimes used interchangeably with reshoring.

Critics argue that reshoring claims often outpace actual factory returns, that consumer prices may rise, and that protectionist industrial policy can provoke retaliation and WTO disputes. Proponents emphasise national security, employment in manufacturing regions, and reduced carbon emissions from shorter logistics chains. For MUN delegates, reshoring is relevant in debates on trade liberalisation, development financing, and the future of global value chains tracked by the WTO, UNCTAD, and the OECD.