Effects of U.S. Supply Chain Re-Orientation: Part I

Executive Summary

Many American industries, especially manufacturing, have become more dependent on foreign suppliers over the past few decades. But the lockdowns that many countries have employed to combat the spread of COVID-19 could lead some of these industries to rethink their supply chains. In the first report in a two-part series, we explore which U.S. industries could face the biggest adjustments if they shift from foreign vendors to domestic ones, as well as the macro effects on the U.S. economy and its major trading partners.

The aircraft & aerospace industry has registered the largest increase in its ratio of imported inputsto-total inputs since 1997. In addition, the leather & apparel, machinery, auto & auto parts, and electrical equipment industries have all experienced large increases in their respective imported input ratios. These industries would potentially face the most significant adjustments if they reoriented their supply chains back toward domestic vendors, although the effect on the macro U.S. economy would not be very large. We also find that China would have the most to lose on an absolute basis, although Mexico and Canada would be the biggest relative losers given their extensive trade ties with the United States. 

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