“Mexico Is the New China”: Reshoring Institute Executive Director Rosemary Coates on the Future of Pharmaceutical Reshoring

Mm.

For sure.

Let's, let's touch on tariffs again for, for a moment.

I mean, you know, f- as an example, you know, tariffs on Chinese imports hit 145% at one point.

Now they're, you know, rolled back to 30%.

I mean, what, what does [laughs] what does all this tariff conversation in the last year, what does that tell you about the effectiveness of tariffs as, you know, a lever or a tool for, for reshoring?

Well, the intent, I think, was to put tariffs in place that would make incoming foreign goods look more expensive.

Not that they were more expensive, but when you tax them like that, it makes them look more expensive.

Mm.

And the i- idea was, if you have imports that look more expensive, you can incentivize US companies to manufacture and then compete, because we can't compete on price.

Our whole cost structure, not only the cost of labor, but the cost of land, permitting, all kinds of things make US manufacturing more complex and more expensive.

So if you make foreign goods look more expensive through tariff, tariffs and essentially taxing the imports, then you can even out that comparison a little bit better.

That's the idea behind it.

However, the reality was something different, mostly because there was so much instability and has been for a while.

So if you wake up one day and the tariff from China is 145% and you're like, "Holy cow, we gotta do something-"

Mm

... "uh, we can't continue to pay that amount of money.

We gotta move somewhere else." And then the next day you wake up and it's at 30%.

And the one thing about business is they need stability to be able to plan.

Mm.

If you say the tariff's gonna be 60% for the next two years, you can plan for that.

You can figure out what to source, how to move things around, how to run your operations.

But if you say today it's 145% and tomorrow it's gonna be 28%, and maybe next week it'll go back up to 100%, that's very frustrating for companies and executives, and it really makes it impossible to plan.

So what we know, and we did a, a study last year that, where we interviewed 18 executives from all across America, mostly in medium-sized businesses, so maybe $500 million to, uh, a billion dollars, somewhere in there, and some smaller companies too.

But we asked all of these executives, "How are you responding to the tariffs?" That was our question.