While the news cycle since the election has been a wild rollercoaster ride, with stories of national impact breaking several times a day, some stories flying just under the radar could have an even greater impact on all of us.

Trump’s talk of imposing new tariffs is one story that made major headlines over the past few weeks—a topic that I covered last week—and there’s a subtle but significant aspect of this that I have yet to see anyone discuss. This one aspect could completely transform our entire economy and have a profound impact on America's trajectory for decades to come.

That’s why it’s critical that we clearly understand the situation and take the right path.

Reshoring is the natural outcome of a comprehensive tariff program. Basically, it means that due to the increased costs of importing products and raw materials, it makes more sense, financially speaking, to buy those products and raw materials domestically instead of abroad.

Ultimately, this strengthens America and fosters a stronger economy for every citizen, but it won’t be a smooth or easy path. Like any substantive change, there will be pain involved during the transition. But just like the sweat and pain you endure at the gym is worth it for the body, health, and longevity it creates for you, the economic pain we will endure as we work to reshore our nation’s production is worth it for the financial stability, growth, and national security it creates for America and our citizens.

Since this subject is complex, I will break it into individual parts.

Improving national security

Most people don’t realize how completely dependent we are on other countries—particularly China, which is not particularly friendly to America in the first place.

In the early 1980s, we started offshoring significant portions of our manufacturing to China, Taiwan, India, and other Asian countries. Today, that list is even longer, and almost no manufacturing is done in the United States.

This puts us in a hazardous place, speaking from a geopolitical perspective, because trade wars, embargos, and military conflicts can completely cut us off from the raw materials and products we depend on, including oil, steel and aluminum, rare earth minerals, and even pharmaceuticals—all of which currently come primarily from other nations.

This puts us in a severely weakened position because a relatively simple series of events could render America unable to defend our nation, maintain our economy, and keep our citizens healthy. If we were to be cut off, our armed forces would be rendered largely ineffective because a single conflict would wipe out our stockpiles relatively quickly. All available resources would have to be repurposed for military purposes, causing economic activity, innovation, and infrastructure to halt.

If you remember descriptions of American society during World Wars One and Two, it would be a lot like that, with citizens being forced, by necessity, to make do with basic survival. The comforts and luxuries we enjoy would be a thing of the past, and it would likely take decades or longer to return to today’s standard of living.

But by bringing production back to the United States—admittedly, a massive undertaking- we can fortify our national security through military strength and independence. When our country depends on other nations, we can be cut off from the materials we need to defend ourselves and keep our economy running, whether from one or a coalition of different countries. Still, when we are entirely independent, we become essentially untouchable. The latter is where we need to be from a national security perspective.

Reducing the impact of supply chain disruption

Even if military conflict never arises, our current position poses tremendous economic risks. From a purely economic perspective, depending on foreign nations to supply most of the products and raw materials we need to keep our economy running is a ticking time bomb. But this isn’t a hypothetical situation—we’ve already experienced this firsthand, multiple times just over the last few years alone.

The COVID pandemic was a perfect example of this, where many ordinary products we depended on became unaffordable or unavailable due to supply chain issues. Countless businesses were crippled as ships sat offshore, unable to unload their shipments, which businesses here had already paid for, at our ports. This demonstrated a massive bottleneck, in some ways, but the reality was that it showed a fatal flaw in our supply chain.

Depending on other nations is only a part of the equation, which has been addressed in the previous section. The other part is the timeline from placing an order to the order being produced, shipped, going through customs, and delivered to the local business here in the U.S. that ordered it in the first place. And then, there’s the added costs and environmental impact that come from moving it across the world.

In other words, our entire supply chain is incredibly fragile right now.

In the event of a significant supply chain disruption, the most prominent companies will gobble up the majority of what’s available, leaving small businesses out in the cold and unable to continue operating. While I'm a supporter of the free market, this is not that. Don’t get the wrong idea here—I’m not suggesting propping up small businesses in any way. I’m highlighting two things.

1. The monopolistic situation we already face will multiply in a supply chain crisis.
2. The nation will suffer economic damage if small businesses start to collapse.

For perspective, 45.9% of Americans are currently employed by small businesses, and those businesses don’t have access to the same credit availability as giant corporations. In many cases, just a few bad months can lead to bankruptcy, forcing layoffs.

Reshoring can help reduce the threat that supply chain issues pose to our economy, but we have to be pragmatic. It’s going to take several large domestic companies stepping up to lead the charge here because the costs will be significant and will require tremendous manpower to execute. But once it starts to gain momentum, more companies will step up to the plate, and costs and manpower requirements will gradually go down.

Driving innovation and technology[1] [2]

In the same way that reshoring drives local production for physical products, it also drives innovation and technological advancements because it encourages domestic R&D investments. This kind of activity depends on a local workforce of both white—and blue-collar workers and domestic production of specialized hardware and software.

We currently outsource this type of development overseas, which is creating many problems. The first is cost, but the second, perhaps more significant, is the theft of our intellectual property.

It’s a well-known fact that the countries we rely on for this production often intentionally steal our IP, which we paid them to create. Then, they compete with us on our own soil with products they stole from U.S. companies. We’re essentially funding other countries to rob us. It’s a lot easier for foreign companies to steal our intellectual property when we send it directly to them, and a lot harder for them to do that when we handle it all internally in the U.S. Reshoring reduces, and in some cases, even eliminates these risks because it keeps this work in the hands of those who directly benefit from it.

It also fosters closer collaboration between start-ups, manufacturers, and universities, which helps to create a more competent workforce that integrates more effectively in today’s workplace, while driving creativity and innovation in America’s business community. Think back to the massive innovation of the 1950s-1960s, the 1980s, and late 1990s- early 2000s for an idea of what kind of outcomes this could foster.

The cherry on top is that in order to support this R&D, we will need comprehensive real estate development to house the research, administration, and manufacturing. This local development and the associated manufacturing that follows—especially when it comes to exports—can play a significant role in strengthening the U.S. dollar, which has declined 4.19% over the last year. [3]

But we have a lot of work to do in order for this to come to fruition. There’s a tremendous amount of groundwork that needs to be laid first, including developing the necessary relationships and partnerships, building a pipeline of students, and creating applicable training programs. But as this evolves, I fully expect to see another technological revolution grow on top of this foundation, which will only be made possible by reshoring.

What about the negatives?

While I’ve addressed the negatives that offshoring has created for our country and the positives that reshoring will create, I haven’t yet addressed the negatives of reshoring.

It’s not that there aren’t any. Reshoring will undoubtedly have some negative impact, but it will be relatively short-term. Like I described earlier, think of it like the temporary pain you feel at the gym. It’s a proverbial “necessary evil” that we must go through to regain our economy's strength.

So, what are the negatives to reshoring?

Let’s start with inflation, which will absolutely initially have an inflationary effect, and we need to be repaired for this.

To bring production back to the U.S., we must first build the appropriate facilities and then arrange manpower and training. This requires a heavy investment ot capital, much of which will likely be financed. Remember that this is something that only the largest corporations will be capable of in the first place because of the immense financial and time requirements to carry it across the finish line. And many will be reluctant to wade into this endeavor because of the risk of getting the rug pulled out from under them.

While America seems to be on the path of financial responsibility under the Trump administration so far, and Republicans currently control the House and Senate, midterm elections are coming up in less than two years. If a company begins investing in reshoring and then a political shift at the midterms derails the administration’s plans, that investment would likely be wasted. Returning production to the U.S. also creates additional regulations, costs, and legal liabilities, which can drive costs up further.

We need to do this, but unfortunately, if we start the process and then bail out before we’ve achieved the end goal, our economy will be worse off than where we are today, and that’s saying a lot considering how bad the underlying economic conditions are. But if we don’t do this, it will worsen exponentially with no chance of recovery.

The truth is that reshoring will likely take several election cycles to put us back in a strong and independent position, and I’m not sure the American people have the stomach for that. I hope I’m wrong.

What if it all goes according to plan?

Once we get through the worst transition period, we can expect inflation to come back down, driven by new jobs created by local production and profits generated from this new domestic production. At first, we’ll see significant job growth in manufacturing, construction, and real estate, but that will soon expand into other industries. This will help to rebuild a strong middle class throughout America.

We can also expect to see a stronger, faster, and more resilient supply chain, which should spur additional growth beyond the companies directly involved. As the effects of this effort ripple out into other industries and as businesses begin to get products cheaper, faster, and more reliably, it will allow them to scale more effectively as well.

Once we become independent of imports and begin to export more than we import, we will no longer face a trade imbalance, and as a result, our GDP will grow significantly. This, coupled with a drastic reduction in the national debt, will put us in a defensible economic position again. The value of our objective and perceived treasury bills will increase, driving demand and further strengthening our economy.

Reshoring presents long-term strategic advantages but comes with short-term economic pain. Success depends on stable policies, workforce development, and technology investment. A gradual approach with a mix of domestic, nearshore, and automated production may balance cost efficiency with economic security.

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Dr. David Phelps created Freedom Founders to help its members achieve the freedom they wanted in their lives by building the necessary financial foundation. He is a noted financial expert who is regularly cited by the media, and recently helped the FL Dept. of Education develop its new financial literacy curriculum.