Morgan Stanley has concluded that one year after the introduction of sweeping US tariffs, there is limited evidence of reshoring — the return of manufacturing to American soil. In a research note published on Tuesday, the investment bank said that while trade barriers have risen, companies have largely absorbed higher costs or shifted sourcing within existing networks rather than building new factories in the United States.
The findings challenge the central premise of the tariff policy, which aimed to revive domestic industry and reduce reliance on foreign supply chains. According to Morgan Stanley, sectors such as electronics, machinery, and automotive parts have seen only marginal changes in production geography. 'The anticipated wave of factory construction has not materialised,' the note stated, adding that labour shortages and regulatory hurdles in the US remain significant deterrents.
For UK investors and pension holders, the implications are mixed. The FTSE 100 fell 0.3% on Wednesday to 7,642 points, partly driven by concerns that persistent trade friction could dampen global growth. Shares in British exporters such as Rolls-Royce and BAE Systems dipped by around 1% each, reflecting anxiety over potential knock-on effects from US tariffs on European goods. Analysts at Citi noted that UK firms with deep US supply chains may face continued margin pressure.
The lack of reshoring also means that supply chain vulnerabilities exposed during the pandemic remain unaddressed. Sarah Coles, head of personal finance at Hargreaves Lansdown, commented: 'For UK pension savers, this means the risk of trade disruptions and cost inflation hasn't gone away. Companies exposed to tariff volatility could see earnings fluctuate, which may affect share prices and dividend payouts.'
Looking ahead, Morgan Stanley expects that the current tariff regime will persist at least through 2025, with no major policy shift anticipated before the next US presidential election. This could leave UK exporters in a state of prolonged uncertainty, while any further escalation in trade tensions might weigh on the broader FTSE 250 index, which has already lost 1.2% over the past month.