The reshoring boom that wasn't: U.S. factory construction keeps falling despite tariff push

New U.S. factory construction has been falling for well over a year, and the tariff-driven reshoring wave that many predicted has yet to show up in the data. That is the central finding from separate analyses published in May 2026 by Interact Analysis, cited by For Construction Pros, and by IoT Analytics, whose 34-page Industrial Macro Pulse report examined macro indicators one year after the April 2025 "Liberation Day" tariffs.

The White House framed the situation very differently in an April 2026 press release, declaring that "the largest reshoring wave in American history" was underway, and pointing to an ISM Manufacturing PMI reading of 52.7 in March 2026 as evidence. But construction data tells a more complicated story.

Construction spending peaked in late 2023 and has been sliding since

According to Interact Analysis, the inflation-adjusted index of U.S. factory construction value climbed from roughly 5,500, 6,000 between 2017 and 2020, then surged to a peak of 12,070 in December 2023. That peak reflected years of pandemic-era supply chain reconfiguration and federal incentives that drove large-scale factory investment. The reversal came quickly. Year-on-year declines exceeded 20% in multiple months during 2024, and through 2025 the index stabilized in the 11,200, 11,600 range, well below its peak.

IoT Analytics reported a similar trend from the spending side, noting that overall U.S. manufacturing construction spending has declined steadily since 2024. A key driver: spending on electronics factories and semiconductor fabs fell 44% from its mid-2024 peak. Strip out electronics, and non-electronics manufacturing construction spending rose only 5.6% from the start of the tariffs through mid-2026, which IoT Analytics described as lower than would be expected for a genuine boom.

Applications for new manufacturing facilities dropped sharply

One forward-looking signal Interact Analysis tracks is the Index of Business Applications for Manufacturing Facilities. Applications ran at elevated levels through most of 2024, then momentum collapsed. By May 2025, total applications had fallen 39.1% year-on-year. That drop fed directly into a revised construction forecast: where Interact Analysis had projected an indexed growth level of 105.9 for 2026 in its Q4 2025 view, the Q1 2026 revision slashed that to 76.0.

The revised forecast reflects a weaker greenfield pipeline, not just a statistical blip. Interact Analysis noted that while reshoring policy support and strategic intent remain strong, the data shows those commitments have not translated into a sustained flow of new factory starts.

Commitments were real, but builds are another matter

Companies did respond to tariff pressure with tangible announcements. IoT Analytics tracked 227 public industrial firms that announced footprint changes in Q2 2025 alone. Of those, 87 said they were expanding existing U.S. operations, 33 committed to moving production from China to the U.S., and 13 said they would relocate from Mexico or Canada. RTX told investors in April 2025 it was planning $2 billion in additional U.S. capacity investment that year, on top of roughly $10 billion invested over the prior five years, according to IoT Analytics.

But Interact Analysis drew a distinction that matters for anyone analyzing construction pipelines: an announced "new factory" frequently turns out to be an expansion or repurposing of an existing site. The firm cited John Deere's excavator facility in Kernersville, North Carolina, as an example. The $70 million project brings production previously performed in Japan into an existing U.S. campus and adds roughly 150 jobs. That is capacity relocation and expansion, not a new standalone factory. The physical factory count does not change.

Utilization rates climbing as existing capacity absorbs demand

U.S. manufacturers have room to absorb rising demand without new construction. Capacity utilization bottomed at 62.5% in April 2020, recovered to roughly 77, 78% in 2021, 2022, then softened in 2024 before climbing again, rising from 74.5% in January 2025 to about 75.5% by December, according to Interact Analysis. That trajectory suggests manufacturers are choosing to sweat existing assets rather than break ground on new ones.

Efficiency improvements and targeted facility upgrades are doing much of the work. When utilization is in the mid-70s and trending up, the business case for a greenfield build is harder to make, particularly against a backdrop of macroeconomic uncertainty that Interact Analysis cited as a reason companies are delaying or scaling back new investment.

Automation and data centers absorbing the capital instead

Investment has not stopped; it has shifted. Interact Analysis projected that the installed base of mobile robots in U.S. factories will grow from approximately 103,000 units in 2023 to around 500,000 by 2030, implying annual growth of roughly 22, 24%. That spending goes into upgrading existing buildings rather than constructing new ones, which means manufacturing output can rise without any change in the factory count.

On the construction side, IoT Analytics identified data centers and power generation infrastructure as the sectors actually driving U.S. industrial building activity in 2026, not factories. That reallocation of capital has implications for contractors, equipment suppliers, and industrial real estate developers trying to locate the next demand wave.

For now, the most concrete next data point to watch is whether the Q2 2026 business application counts for manufacturing facilities show any recovery from the 39.1% year-on-year drop recorded in May 2025, a figure that directly shaped Interact Analysis's sharply reduced construction forecast for this year.