McKinsey chairs: Building a more resilient industrial base may require $2 trillion in investment

The United States imports about $3 trillion in manufactured goods each year. A meaningful share is tied to products that face at least one of three trade dependencies that expose imports to vulnerabilities: criticality to national security; concentration among a few suppliers; or sourced from geopolitically distant partners. One-quarter face at least two of them. Five percent lie in the bull’s-eye of all three, overwhelmingly computers, electronic products, and key materials like rare-earth magnets.

Economic and national security are increasingly intertwined. Still, for cost and efficiency reasons it doesn’t always make business sense to produce things at home. Countries trade with each other for good reasons.

To help quantify what’s possible for US manufacturing to make more at home, we created a “ramp-up factor.” It gauges how much domestic production would need to increase in order to produce what’s currently imported. We examined 5,000 products across almost 350 industries to assess how ramp-up varies.

Factors below 1 suggest existing capacity can support enough extra production to replace imports. Some manufacturing stalwarts, like aircraft, fit this bill. And the output potential for these types of products adds up. Simply running factories at higher utilization could generate an additional $660 billion in output, equivalent to about half the trade deficit (of course, this uptick in output would depend on US producers having a market for the additional supply).

But this would make little dent on the most sensitive exposures for future-shaping products like semiconductors and data center servers that will drive tomorrow’s economy. For about half of these goods, US production capacity would need to quintuple or more. Growing production to the extent needed to eliminate the most critical trade exposures could require about $2 trillion in capacity-creating investment.

That number may seem daunting. But it’s not unprecedented. The United States has mobilized capital at similar scale before, for example the build out of the liquefied natural gas (LNG) industry or more recently in AI-connected capital projects. What made those transformations possible was a compelling business case aligned with national priorities. But funding may be the easy part: specialized skills, supporting infrastructure, sufficient energy, and shovel-ready projects are all needed.

There has been some industrial ramp-up in sectors including electronics and aerospace over the past year, but so far not at a broad enough scale to reshape the factory sector. Foreign direct investment flows suggest new capacity is being created, most notably in semiconductors and batteries. But outside of FDI, overall investment has not yet seen a sustained boom.

Before massive amounts of capital are deployed and new plants built, manufacturers can start acting now. Even as they start ramping up, they can examine other ways to lower trade dependencies, for example by reallocating sourcing to more trading partners. They can redesign supply chains to build resilience, and train workers for automation.

Emerging technologies like AI and advanced robotics are not optional in this scenario; they are foundational. Many of the factories that emerge from this transition will look very different from today’s. They may require fewer workers in some roles, more highly skilled workers in others, and entirely new operating models that blend digital and physical production.

The ramp-up transformation requires coordinated shifts across entire ecosystems and supply networks. Energy infrastructure, workforce development, permitting processes, and supply chain visibility all become critical enablers.

The United States has latent strength across each of these dimensions. It is still the world’s second-largest manufacturer, even though its share of the global total has receded for several decades. Our research makes clear that rebuilding the industrial base would not mean recreating the past. Nostalgia for the days when manufacturing accounted for a quarter of the total workforce is understandable. But the economic realities have changed; that world is not coming back.

Instead, it would mean building something new—more automated, more technologically advanced, and with different skills. Unlocking these capabilities requires sustained effort.

Companies that act early—by strengthening resilience, investing in capacity, sharpening worker skills, and rethinking supply chains—will be better positioned to capture demand as it shifts.

The question is not whether the United States can compete in manufacturing, but where and how it chooses to do so.

The past 50 years have reshaped global manufacturing around cost and efficiency. The coming years will reshape it around resilience. For the United States, that shift is not a burden. It is an opportunity.

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