Reshoring and FDI Definitions
Foreign Direct Investment (FDI) Definition
FDI includes announcements of new or expanded U.S. manufacturing facilities, investments, or jobs by companies whose global headquarters are located outside the United States.
In most cases, classification is straightforward. Companies with names that include terms such as "U.S.," "USA," "North America," or "Americas" are often subsidiaries of foreign corporations. When ownership is uncertain, we verify the location of the company's global headquarters based on the year the announcement was made.
Ownership can become more complex when historically U.S. companies have been acquired by foreign firms, such as Chrysler or GE Appliances. In these cases, announcements are classified according to the company's ownership at the time of the announcement, regardless of where the company originally originated.
For joint ventures involving both U.S. and foreign companies, such as partnerships between U.S. automakers and Panasonic to manufacture EV batteries, the announced jobs and investment are allocated proportionally between Reshoring and FDI based on the ownership structure of the venture.
Reshoring Definition
Reshoring is defined as the return or expansion of manufacturing and supply chains to the United States by U.S.-headquartered companies. Unlike foreign direct investment (FDI), identifying reshoring often requires evaluating the intent and market impact of an announcement rather than simply determining company ownership.
To qualify as reshoring, a case must involve a U.S.-headquartered company and meet one of the following criteria:
- Direct Reshoring: The company explicitly states that it is localizing production or supply chains to the United States.
- Import Substitution Reshoring: The company increases U.S. production in an industry with historically high import dependence (typically 80% or greater), where the new domestic production is expected to replace imported goods.
- Strategic Products: The company expands domestic production of products identified by the U.S. government as strategically important to domestic supply chains or national security.
For direct reshoring cases, the company does not need to use the term reshoring, nor is the closure of an offshore facility required. Instead, we look for statements indicating that production or sourcing is being localized in the United States. Common indicators include:
- Expanding production to support Made in USA products.
- Increasing domestic capacity because existing U.S. production is insufficient to meet demand.
- Bringing production closer to customers.
- Improving supply chain resilience or reducing geopolitical risk.
Import substitution reshoring recognizes that some industries are so heavily dependent on imports that new U.S. production can reasonably be assumed to replace imported goods, even when a company does not explicitly state that production is returning from overseas. These industries typically have import penetration exceeding 80% and include sectors such as EV batteries, pharmaceuticals, apparel and rare earth minerals.
Strategic Product Reshoring involves products that the U.S. government has declared are essential and/or has provided grants to enable domestic production. Many of these products also meet the 80% rule.
A complete list of qualifying product categories is available upon request.
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