Episode summary
Will U.S. Manufacturing See a 2026 Boom?
Thoughts on the Market (Morgan Stanley)
· · Hosts: Michelle Weaver · Guests: Chris Snyder
Summary
Tariffs and supply-chain reconfiguration are driving a new wave of efficiency spending across U.S. manufacturing, and Chris Snyder argues that this is the first step toward a bigger reshoring cycle. He says companies want to serve the U.S. market, which he describes as 30% of global consumption and the best-margin region in the world, so they are squeezing more output from existing assets before committing to new plants.
Snyder sees that spend as a leading indicator for greenfield construction because higher import costs are changing the economics of where to build. He points to a regional split in producer price inflation: North America saw PPI rise in 2025 while most other regions saw it fall, a signal he interprets as returns improving in the United States and weakening elsewhere. On his view, price drives returns, and supply will follow returns.
The market’s skepticism centers on weak manufacturing demand and a shrinking ISM manufacturing PMI, but Snyder says that is not the key driver this time. He argues that tariff mitigation can justify capacity investment even without a normal demand cycle, and he expects the U.S. industrial economy to reach decade-high growth in the back half of 2026 and into 2027. Michelle Weaver adds that the broader multipolar world theme should shift from short-term tariff defense to longer-term reshoring and more U.S. defense exposure in 2026.
Key takeaways
- Chris Snyder says tariffs are the main catalyst behind U.S. manufacturing efficiency spending, not a normal demand-cycle upswing.
- He argues the U.S. market’s scale and margin profile make it the cheapest and fastest place to add productive capacity.
- Snyder points to North America’s higher 2025 PPI as evidence that returns are improving in the U.S. relative to other regions.
- He expects manufacturing project announcements to broaden in 2026, which he sees as stronger evidence than a few mega-projects.
- Snyder expects the U.S. industrial economy to hit decade-high growth in the back half of 2026 and into 2027.
Notable quotes
“the quickest, cheapest, fastest way to bring production online in the US is drive better productivity and efficiency out of the assets you already have”
“I think this is absolutely the leading indicator for green fields because this is telling us that the supply chain cost calculation has changed”
“price drives returns and supply is going to follow returns. And right now that price data tells us the returns are in the United States”
“the motivation right now is tariff mitigation, and you do not need higher demand to support that”
“We published our outlook and we're calling for the US industrial economy to hit decade high growth levels in the back half of 26 and into 27”
How the episode opens
Welcome to Thoughts on the Market. I'm Michelle Weaver, Morgan Stanley's US thematic and equity strategist. — I'm Chris Snder, US multi-industry analyst.
Today, will 2026 be the year of US manufacturing's transformation? It's Tuesday, January 13th at 10:00 a.m. in New York.
US reshoring has been an important component of our multi-polar world theme, and manufacturing is one of those topics we have always had our eyes on. We've been making some big predictions about a transformation in this sector. So, it makes sense that it features prominently in the big debates we've identified for North America in 2026.
In the last few years, there's been a steady stream of investments in automation controls and upgrades across US manufacturing. And this is happening against a backdrop of shifting global supply chains and lingering policy uncertainty. Now, the big market debate is whether these investments will generate a whole wave of green field projects.
That is brand new multi-year construction initiatives to build facilities, factories, and infrastructure from the ground up. Chris, what exactly is driving this current wave of efficiency and productivity investment in US manufacturing? And how long-term of a trend is it?
I think what's driving the inflection is tariffs. The view that has underpinned my US reshoring call is that I believe companies have to serve the US market. The US accounts for 30% of global consumption equal to EU and China combined.
It is also the best margin region in the world. So companies have to serve the market. And now what they're doing is they're going back and they're looking at their production assets that they have in the US and they're saying how can I get more out of what's already here?
So the quickest, cheapest, fastest way to bring production online in the US is drive better productivity and efficiency out of the assets you already have.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- us manufacturing outlook
- efficiency investments
- productivity gains
- 2026 transformation
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Watch “Will U.S. Manufacturing See a 2026 Boom?” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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