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Since last year when then-President Trump announced the so-called "Liberation Day," it has been over a year since the US imposed broad tariffs on global trade partners.
Morgan Stanley analysts found that Trump's claimed goal of boosting US manufacturing reshoring through trade seems unachieved — limited signs of manufacturers moving production back to the US, while overseas supply chain adjustments far outpaced actual domestic capacity expansion.
I. US Import Dependence Still Rising
Using a framework tracking industrial production and trade across sectors, Morgan Stanley economists noted that over the past year, US import dependence not only did not decline but rose further.
The report says in December 2025, the overall import share of all US goods rose to 33.6% from 32.8% a year earlier; durable goods import penetration rose from 42.7% to 43.5%.
Citing BEA and Census Bureau data, Morgan Stanley said US GDP grew slightly over $100 billion (about 1.5%) in 2025, while imports rose about $150 billion (about 5.3%).
II. Limited Boost to US Domestic Manufacturing
Among sectors, machinery came closest to Trump's "reshoring" goal — US industrial machinery imports fell and domestic production rose last year.
However, total US machinery supply grew only about 1% YoY in 2025, vs zero growth in 2024, with negligible overall capital stock expansion. Overall, US machinery import dependence remains high at about 44%.
Meanwhile, the US steel industry was heavily impacted by Section 232 steel/aluminum tariffs. Since June 4, 2025, the US raised the Section 232 additional tariff on imported steel and aluminum from 25% to 50%, leading to a 30.1% drop in iron ore and steel imports and 6% domestic production growth.
However, under tariff barriers, total US steel market supply fell sharply, causing domestic steel prices to surge. The report says US steel prices are now about double those in China and 50% higher than in Europe.
Morgan Stanley said since the October 2024 trough, aerospace contributed most to US industrial production growth, but this mainly reflects Boeing's recovery from capacity constraints, not new capacity.
Additionally, import dependence for computer and AI-related products rose most significantly. Amid the AI boom, US AI-related imports grew at an annualized rate exceeding $550 billion, about 17% of total US imports, up from single digits two years ago.
Citing BEA data, the report notes global manufacturing FDI into the US has stayed between $110-$125 billion in recent years, far below the 2015 peak over $200 billion — indicating tariffs have not clearly boosted US manufacturing investment.
