The Reshoring Initiative (RI), whose mission is to teach manufacturers that local production can reduce costs of ownership, is telling multinational companies hit by the tariffs to do the math correctly.
Most companies make sourcing decisions based solely on price, oftentimes resulting in a 20 to 30 percent miscalculation of actual offshoring costs. The firm offers a free online tool, the Total Cost of Ownership (TCO) Estimator, designed to help companies account for all relevant factors — overhead, balance sheet, risks, corporate strategy, and other external and internal business considerations — to determine the true total cost of ownership. TCO allows companies to better evaluate sourcing, identify alternatives and even make a case when selling against offshore competitors.
RI, who supports the Trump Administration's trade objectives, says the best way to avoid tariffs is to increase domestic sourcing. Affected companies can increase profits and reshore at least one million manufacturing jobs at the same time, thereby reducing the motivation for tariffs.
The firm also proposes a detailed policy plan to balance the $700 billion/year U.S. manufactured goods trade deficit. The plan will level the playing field and boost U.S. competitiveness, RI says.
The Initiative largely blames the media.
"Almost uniformly, the national media and multinational companies oppose the administration’s use of tariffs," RI said in its newsletter. "For the past 20 years, why weren’t the media aggressively demanding an end to the goods trade deficit that has cost the U.S. 5 million manufacturing jobs? Past administrations might have acted before the deficit grew this large."
"Why have companies failed to do the math and calculate the profitability of their sourcing decisions accurately? If the media and businesses had done their jobs all along, tariffs would not be an issue today."
"We also call on the national media to report on the millions of jobs lost offshore over the last 40 years as much as they report on the thousands lost in the current trade dispute – and to promote the National Reshoring Awards that recognize companies that have done the math."
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