Reshoring manufacturing has been a central argument in President Donald Trump‘s case for tariffs, both during his first term and throughout his 2024 campaign and current administration. Yet, the manufacturing revival Trump wanted wasn’t due to tariffs.
US Manufacturing Growth Hits 4-Year Highs
The ISM Manufacturing PMI surged to 55.6 in July from 53.3 in June, its highest reading since May 2022. All five components that directly feed the headline index moved into expansion territory.
Production jumped to 58.5, its strongest reading since November 2021. Employment crossed 50 for the first time in 33 months, while new orders, backlogs and exports all expanded.
Factories are also hiring again.
The ISM Employment Index jumped from 49.7 to 52.8, its highest reading since August 2022 and its first expansionary reading in 33 months.
Benzinga examined where the new orders, production and hiring are coming from. The clearest source of momentum isn’t protection from foreign competition. It is an investment cycle so large that it is beginning to reshape America’s physical economy.
AI Is Becoming America’s Industrial Policy
The fingerprints are all over the ISM report. Computer and electronic products expanded in July. So did machinery, transportation equipment and electrical equipment.
Manufacturers themselves are pointing out the trend.
One purchasing manager in computer and electronics cited growth across "semiconductor, AI, advanced packaging, and high-performance computing markets."
A machinery executive was even more explicit.
"Products going into data centers are at full procurement and manufacturing ramp-up," the respondent said.
Demand for semiconductor products and data-center connectivity across power, networking and photonics was "booming," while orders tied to medical, industrial and consumer products were markedly weaker.
That is the paradox inside Trump’s manufacturing boom. Washington built its industrial strategy around tariffs, but America’s AI capex supercycle may be doing more to fill factory order books.
This Isn’t A Boom For Everyone
Jeffrey Roach, chief economist at LPL Financial, sees another important feature in the data: America’s K-shaped economy has spread from consumers to corporations.
"The K-shaped economy that describes the consumer space is a good descriptor for the corporate sector too," Roach said.
Some demand is retreating while other areas accelerate.
The ISM responses show that divide clearly.
One chemical-products manufacturer described customers simultaneously reducing inventories and pulling forward demand. "As many customers that are slowing down, an equal number are growing," the respondent said.
Another manufacturer reported a downturn across several business units, particularly consumer products.
AI Infrastructure, Defense Demand Run in Opposite Direction
This is less a broad industrial renaissance than a redistribution of manufacturing demand toward industries sitting closest to the capital-spending boom.
For investors, that distinction matters.
The winners may not simply be American manufacturers. They are increasingly the companies supplying the physical infrastructure required to turn hundreds of billions of dollars of AI investment into actual data centers.
The iShares U.S. Manufacturing ETF (NYSE:MADE) has gained roughly 18% year to date, versus a 10.9% advance for the S&P 500.
More revealing is what sits near the top of the leaderboard. Several of MADE’s biggest winners are exposed to the physical AI buildout — the power, electrical equipment and electronics needed to turn data centers from blueprints into operating infrastructure.
Bloom Energy Corp. (NYSE:BE), which supplies onsite power solutions increasingly targeted at data centers, has surged 151% year to date. Vertiv Holdings Co. (NYSE:VRT), a major supplier of power and cooling infrastructure for data centers, has gained 62%.
That market performance reinforces the message coming from factory floors: investors aren’t simply buying a reshoring story. They are buying the companies supplying the infrastructure behind the AI capex boom.
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