Onshoring momentum grows as global manufacturers grapple with U.S. tariffs
Writer: Mirella Franzese
March 2025 – Both U.S. and foreign manufacturers are expanding onshoring efforts in response to President Donald Trump’s evolving tariff and trade policies.
Tariffs on imports from Mexico, Canada, and other regions, have driven up raw material costs, including steel, with a new 25% tariff on U.S. auto imports set to go into effect on April 2.
“A lot of manufacturing companies are now having to raise their prices,” said Boomer Technology Group CEO and Founder Derris Boomer to Invest:, who noted the challenges posed by the tariffs.
Prices for steel, a key material in auto manufacturing, increased by 12-15% in February 2025, prior to the implementation of Trump’s tariffs.
As tariffs drive up the cost of imported materials, U.S.-made products may become more attractive to businesses and consumers, fueling onshoring efforts.
South Korean auto manufacturer Hyundai recently announced a $21 billion onshoring plan in the United States, including a $5.8 billion steel plant in Louisiana, aimed at offsetting the financial impact of tariffs, according to CNBC.
The new plant is expected to create 1,500 jobs and will produce steel for EV manufacturing. “The best way for [Hyundai] to navigate tariffs is to increase localization,” Hyundai Motor CEO José Muñoz recently told Axios. On Wednesday, the carmaker also opened its Hyundai Motor Group Metaplant America (HMGMA) in Ellabell, Georgia, marking one of the state’s largest economic development projects. The $12.6 billion facility will produce electric and hybrid vehicles for Hyundai, Genesis, and Kia, with an initial capacity of 300,000 vehicles annually. The plant is expected to create 8,500 jobs by 2031 and is supported by partnerships with local universities and technical colleges.
Semiconductor giant Taiwan Semiconductor Manufacturing Company (TSMC) and Japanese multinational investment holding company SoftBank have also committed significant investments to U.S. operations.
TSMC plans to invest $165 billion into the Phoenix economy as it expands its existing Arizona facilities, while SoftBank’s CEO Masayoshi Son announced a $100 billion investment in AI developments across the nation, expected to create 100,000 jobs.
READ MORE: Phoenix sees population surge from in-migration, chip growth
Increased onshoring of manufacturing is expected to spur investments in industrial markets across the Midwest, Southeast, and Sunbelt, areas with strong infrastructure, skilled labor, and large consumer bases.
In Minnesota, Minneapolis-St. Paul and the wider region are experiencing growing demand for data centers, which provide key infrastructure for advanced manufacturing operations. “We’ve lagged a little bit behind some other markets in attracting some of the hyperscale data centers. [But] this has recently shifted and there is lots of activity in the data center space,” Jeff Callinan, SVP of JE Dunn Construction in Minneapolis-St. Paul, told Invest:. JE Dunn ranks among the Top 8 largest domestic general building contractors in the United States.
“[Data center] projects often exceed $1 billion in construction cost, so they have a profound impact on the local construction industry,” added Callinan, who spoke with Invest: earlier in March.
As U.S. manufacturing shifts, inland logistic hubs may benefit, challenging traditionally dominant coastal cities with easy access to ports, according to a recent report by Allegro Real Estate Brokers & Advisors.
However, Callinan cautioned that this new wave of tech investments could lead to rising costs in labor and industrial real estate space. “The primary challenge is the workforce. We haven’t seen a major pinch from that yet, but I expect that it is coming. Especially as data center work starts, they will suck up a lot of talent in the electrical and mechanical areas. I think the worst is yet to come on that side.”
Top image via Hyundai Motor Group
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