McKinsey: How Much Domestic Manufacturing Does the US Need?

The US imports trillions of dollars worth of manufactured goods every year, and President Donald Trump wants to put a stop to this. 

In April, the White House reported that American manufacturing hit a four-year high. 

Apple, NVIDIA and Johnson & Johnson are just a few of the businesses making big investments to reshore to the US.

But how much investment and growth is needed to address the country's trade dependencies? 

An April McKinsey Global Institute report, titled Ramping up manufacturing in America?, describes around a quarter of these imports as "Achilles' heels". 

America's Achilles' heels

Each year, the US imports roughly US$3tn of manufactured goods, the report says. 

Around 25% are Achilles' heels, with "potentially disruptive" combinations of at least two factors: criticality, concentration and geopolitical distance.

In total, around US$1.4tn in US imports are concentrated, with the country relying on three or less economies for supply. These include semiconductors, GLP-1 drugs and small passenger vehicles.

Around 5% of manufacturing imports have all three dependencies, primarily computers and electronic products. 

These items with all three dependencies include smartphones, laptops and rare earth magnets.

Ramping up existing factories

Replacing imports is no easy feat, and existing domestic manufacturing capacity is not capable of closing the gap. 

In 2025, US manufacturing operated at utilisation levels almost 4% below the last decade's peak in 2018. Different sectors are running at different levels, though. 

Food and beverages is operating close to historical peaks, for example, but transportation equipment sectors are working around 10 to 15% below peaks. 

McKinsey's report gauges how much domestic production for different industries would need to increase to produce the amounts currently imported. 

Manufacturing of laptops, PCs, servers, rolled and extruded nonferrous metal, footwear and toys would need to increase more than 10 times. 

Across all electronics, the average ramp-up needed is just more than six times current output. 

Average production of chemicals would need to more than double, and textiles and apparel would require an average eightfold increase. 

The sectors requiring the lowest ramp-up to meet demand are wood and paper, petroleum and coal, food and beverages, transportation equipment and plastics and rubber. 

Running factories at full capacity

Some industries are not running at anywhere close to capacity, with slack productive capacity representing around US$660bn in value in the report. 

Almost US$300bn of this figure comes from the transportation equipment sector alone. Electronics represents around US$40bn, metals US$80bn and textiles and apparel just US$4bn. 

The most sensitive product-level exposures, however, would receive a limited effect on trade from higher utilisation. 

For semiconductors, increasing utilisation could offset 10% or more of imports, representing just 6% of exposed products. 

Where imports face all three trade dependencies, the share of impact from domestic ramp-up falls to just 2%. 

Building new US factories

One way to reduce trade dependency is to replace or reduce the use of specific exposed goods.

This needs product design and production to change, and some efforts are underway to do this. Without making this engineering progress, simply shifting away from exposed imports require sacrifice or expense. 

Another option is to build new capacity. Many businesses are doing just that. 

Jabil and Siemens are aiming to follow growing demand for data centre electrical equipment with a US$30m investment in Virginia. 

In addition to this, Siemens has invested a total of more than US$1bn in US manufacturing. 

“These investments, and those we anticipate in the years ahead—reflect our commitment to serving US customers, the continued growth we see in the US market and our pride in supporting a strong, innovative domestic manufacturing base that is essential to America’s long-term competitiveness and resilience," says Ann Fairchild, President and CEO of Siemens USA.

Apple has launched its American Manufacturing Program and announced an expansion of US$400m, partnering with Bosch, Cirrus Logic, TDK and Qnity Electronics to manufacture essential materials and components in the US.

NVIDIA and Corning have partnered in a deal that will see Corning’s US fibre production capacity rise by 50% and create 3,000 jobs in the country.

Johnson & Johnson has pledged to develop two new facilities: a next-generation cell therapy manufacturing site in Pennsylvania and a state-of-the-art drug product facility in North Carolina.

In November 2025, Stellantis committed to a US$13bn investment targeting a 50% increase in vehicle production and the creation of more than 5,000 jobs. 

While some investments are coming in, growing domestic manufacturing to replace imports is still going to take a lot of money and time.