#U.S. Manufacturing #Nearshore Talent #1840 Company

The Impact of Tariffs on U.S. Manufacturing and Nearshore Services

Recent developments surrounding tariffs have ignited a significant revival of U.S. manufacturing, with a fresh wave of enthusiasm surrounding the idea of "Made in America." As manufacturers are compelled to reinvest in domestic production, the service sector's reliance on nearshore talent is simultaneously gaining traction, reshaping the U.S. economy in the process.

The reimposition of tariffs has seen companies across various sectors reassess their strategies, thereby pushing them to invest in domestic factory operations. According to Bryan DiGiorgio, CEO of 1840 Company, a global recruitment firm, this renewed focus on local production aligns well with the challenges posed by labor shortages across professional sectors. "When domestic labor markets are tapped out, nearshore and offshore teams become the pressure valve that keeps U.S. companies agile, competitive, and growing," he notes.

In July, the country experienced a widening trade deficit, which highlighted the dual track of the economy wherein increased goods production goes hand-in-hand with escalating service imports. Details from the U.S. Department of Commerce reveal that the trade deficit soared by 32.5% to $78.3 billion as imports surged, indicating that while manufacturers are compensating for the impacts of tariffs, the demand for professional services is rising just as quickly.

Reshoring Takes Center Stage

The evidence supporting the reshoring movement is compelling against the backdrop of tariff-induced changes in the manufacturing sector. A notable example includes the recent $2.5 billion expansion by Apple and Corning in Kentucky, aimed at the production of Gorilla Glass, a crucial component for the iPhone. Such investments are expected to rise in areas like semiconductor manufacturing and automotive supply chains, as companies look for ways to mitigate tariff risks and ensure localized supply channels. The tariffs' goal of rejuvenating U.S. manufacturing and generating domestic jobs is clearly reflected in these trends.

Services: An Alternate Reality

However, the outlook for professional services is markedly different. Unlike physical goods, services can’t be swiftly repositioned to domestic markets, due to a combination of existing trade surpluses and a thin domestic workforce. Research from the Federal Reserve Bank of St. Louis has pinpointed hiring bottlenecks across sectors like healthcare, technology, and business services, leading to obstacles in fulfilling the workforce needs despite the reopening of factories.

According to DiGiorgio, companies struggling to find adequate workforce solutions for call center positions, finance, marketing, and IT roles are becoming increasingly reliant on foreign labor. "Even with AI automation, the demand for qualified professionals remains severe,” he adds.

The Surge in Service Imports

In 2023, the U.S. saw service imports, especially in technology and consulting, reach unprecedented levels, amounting to $388.8 billion, with July alone recording $75.5 billion. This surge illustrates a significant shift towards seeking offshore talent as a strategic response to domestic labor shortages. DiGiorgio emphasizes this changing dynamic, remarking, "Offshore hiring has evolved from simple cost-cutting measures to becoming critical for capacity insurance for U.S. businesses."

The Nearshore Advantage

Looking at geographical trends, Latin America—in particular, Mexico, Colombia, and Argentina—has emerged as a vital hub for professional services. The region’s cultural affinity, along with time zone advantages and growing technical expertise, positions it as an ideal nearshore partner for U.S. firms. This advantage extends beyond mere geographical proximity to encompass elements like quicker response times, easier compliance adherence, and scalable workforce solutions that are essential as local labor markets become strained.

1840 Company: A Key Player

1840 Company plays an instrumental role in facilitating the connection between American businesses and global talent. Headquartered in Overland Park, Kansas, this staffing firm is dedicated to securing and managing talent across nearshore and offshore markets, boasting capabilities in over 150 countries.

As demand from U.S. manufacturers builds, especially under protection from tariffs, 1840 Company is gearing up to expand its workforce within Latin America significantly.