Domestic Manufacturing Comeback: Renaissance or Rhetoric?

The narrative of the “hollowing out” of American manufacturing is well-known, and perhaps just as well-known is the narrative around a coming “manufacturing renaissance” in the U.S. After four decades of globalization, manufacturing employment in the U.S. as a share of total employment has steadily decreased, from over 20% in 1980 to below 8% in 2025. The decline was driven by a trade shift in the 1980s followed by a productivity boom in the 1990s. Another major factor behind the shrinking manufacturing sector is the natural progression of economic development. As economies mature, growth increasingly shifts toward services, while agriculture and manufacturing account for smaller shares of overall activity.

We’ve seen this across all major global economies. But that doesn’t mean the manufacturing sector loses importance over time, so let’s dig deeper into what a manufacturing renaissance would be like.

While domestic manufacturers have faced competition from imports since as early as the 1970s, we key in on the 1980s as a marker for the start of the globalization and outsourcing trend due to several global macroeconomic shifts, including normalizing trade relations with China via “most favored nation” (MFN) tariff designation in 1980; the 1985 Plaza Accord driving Japanese supply chains to lower labor costs regions in Asia; and China’s own internal market reforms and the launching (and expanding) of special economic zones.

China’s eventual admission into the World Trade Organization (WTO) in 2001 serves as an accelerator of the trend, rather than the start. The reduction in manufacturing employment hit certain regions of the U.S. harder than others, and this naturally led politicians representing these areas of the country (as well as presidential candidates seeking electoral votes from said states) to lament globalization and the jobs and livelihoods it “stole.” Catchy campaign slogans and unrealistic promises followed, reaching a crescendo with Donald Trump’s first election in 2016. However, we are primarily interested in the market and societal forces that could drive a meaningful return of U.S. manufacturing, and what indicators should we track to understand if this inflection is in fact taking place.

Like rising literacy rates and the printing press pre-dating the Scientific Revolution, or coal-burning energy and the invention of the steam engine during the Industrial Revolution, every renaissance requires the convergence of multiple societal tailwinds. Hyperbole aside, if we are in fact experiencing an American industrial renaissance, we should be able to identify these societal forces converging. We have identified three such forces: 1) supply-chain resilience, 2) industrial policy with (mostly) bipartisan support, and 3) domestic energy production as a competitive advantage.