Nearshoring vs. offshoring in 2026: the landed-cost math
Factory price is the number everyone compares and the least useful one. How to run the landed-cost comparison between China and other origins properly — duty per HTS code, freight, transit inventory, MOQ, tooling and the agent fee — with a molded gasket worked all the way through.
“Nearshoring” has become a word people say when they mean “somewhere a truck can reach,” and “offshoring” a word for “China.” Both are really answers to one question: for this part, at this volume, where does a unit land cheapest and most reliably at my dock?
That question is answered with landed cost, and landed cost is where most comparisons go wrong — usually because they stop at the factory quote. (If you want the definitions first — nearshoring, offshoring, reshoring, friendshoring — they are on our nearshoring page. This post is the arithmetic.)
The five terms that make up landed cost
1. FOB price. What the factory charges, loaded at the port or dock of origin. This is the number on the quote and the one buyers compare. It is also the one that varies least between origins for many parts: higher outside China, rarely by enough to decide anything on its own.
2. Duty and tariffs. Applied to the customs value at entry. As of September 26, 2026, this is where the origins diverge:
- China: MFN plus the existing list rate (25% on Lists 1–3, 7.5% on List 4A, nothing if unlisted) plus the 12.5% from the July 24, 2026 Section 301 action — 37.5 points above MFN on List 1–3 parts, 20 on List 4A, 12.5 on unlisted goods.
- Other origins: MFN + 12.5% (10% for some economies) since July 24, 2026 — unless the goods are FTA-qualifying, in which case 0%: MFN waived, no Section 301. The rule of origin is checked per part, never assumed; a part that fails it pays MFN + 10%.
- Any origin: Section 232 on articles essentially all steel, aluminum or copper (50%) and derivatives substantially made of them (25%), since June 8, 2026, in place of the 12.5%/10%. Under 15% metal content is exempt. An FTA waives MFN, not Section 232.
3. Freight. Ocean transit like China runs roughly the same per container from any ocean origin; the per-unit cost depends on how many units fit. Truck freight in days instead of 30–45 on the water is cheaper per unit for most goods and dramatically cheaper for bulky ones. Add insurance and the terminal and drayage charges at destination.
4. Fees. Customs brokerage, the Merchandise Processing Fee (0.3464% of value, capped), Harbor Maintenance Fee on ocean freight (0.125%), and whatever you pay a sourcing agent. Ours is 10% of FOB and it is included on every alternative we quote, so the comparison is against your current cost and not against a number that omits us.
5. The costs nobody puts on the quote sheet.
- Transit inventory. A container that takes 40 days to arrive is 40 days of working capital. On a $150,000 annual program at a 12% cost of capital, six weeks of inventory on the water is roughly $2,000 a year — not decisive alone, but it adds up across SKUs and it disappears with truck freight.
- Safety stock. Long, variable transit means more buffer at your warehouse. Short, reliable transit means less.
- MOQ. Ocean economics push toward full containers and large runs. A supplier a truck ride away can ship monthly in smaller quantities, which changes your cash cycle.
- Tooling. A mold or die is a sunk cost at the origin where it lives. Moving it costs money and re-validation time; the first origin decision on a tooled part is stickier than the second. Own the tool wherever it is.
A worked example: the molded gasket
Take the hero part from our re-quote sheet: a molded EPDM gasket, HTS 4016.93.50 (MFN 2.5%, List 3), 120,000 units a year, currently single-sourced in China at $1.20 FOB, freight to Dallas.
| Per unit | China | Alt. origin · 12.5% duty | Alt. origin · FTA, 0% |
|---|---|---|---|
| FOB | $1.20 | $1.26 | $1.38 |
| Duty | $0.48 (40.0%) | $0.19 (15.0%) | $0.00 (0%) |
| Freight | $0.06 | $0.07 | $0.03 |
| Landed | $1.74 | $1.52 | $1.41 |
| Our fee, 10% of FOB | — | $0.13 | $0.14 |
| All-in | $1.74 | $1.65 | $1.55 |
| Annual, all-in | $208,800 | $197,520 | $185,760 |
China duty is MFN 2.5% + 25% List 3 + 12.5% Section 301 = 40.0%. The 12.5% origin pays MFN + 12.5% = 15.0%. The FTA-qualifying origin pays 0% once the rule of origin is documented for the heading.
Net saving at the best origin: $23,040 a year, 11% after our fee. The 12.5% origin nets $11,280 (5.4%). Note what did and didn’t matter: the winning origin’s factory price is 15% higher than China’s and it still wins by 11%, because the duty line is 48 cents against zero and the freight line is half.
Now the part of the analysis a quote sheet can’t show. Suppose the two alternatives had landed within a few cents of each other — it happens often. One is an ocean transit with container-sized MOQs; the other is truck freight in days with monthly releases. If the gasket feeds an assembly line with demand that moves, the nearer origin’s few cents buy a shorter cash cycle and no port risk. If demand is flat and predictable, the lower number is the number. That is a business decision, not a spreadsheet decision, and it is the conversation the re-quote is meant to start.
The counter-example that keeps us honest
Not every molded part moves. An injection-molded PP enclosure on HTS 3926.90.99 (MFN 5.3%, List 4A) lands $2.77 from China, $2.79 from a 12.5% origin and $2.50 from an FTA-qualifying origin. After our fee the net is under 1%. The recommendation on that part is to stay put and fix the inspection plan at the factory you have. List 4A carries +20 points from China against +12.5 elsewhere — a 7.5-point gap — and a higher FOB eats it.
When each origin tends to win
China wins when the sub-supply chain lives there (complex assemblies, electronics), tooling needs to iterate fast, the part is List 4A or unlisted with a small duty gap, or the category is one other origins haven’t built depth in. About a third of our re-quotes end with “stay in China” — often at a different factory, with a real inspection plan.
A 12.5% origin wins when the part is on Lists 1–3 (a 25-point duty gap to China), demand is stable and container-sized, and the ocean economics are the same as China’s anyway. Same transit, a fraction of the duty.
An FTA-qualifying origin wins when the rule of origin holds for the heading — 0% against MFN + 37.5 on a List 1–3 part — and especially when it also brings truck freight, small lots and short lead times. When it is metal, Section 232 flattens the duty gap and logistics decide.
Domestic wins when the part is heavy steel with low labor content, the program is under roughly $50,000 a year, or freight and Section 232 together erase the FOB gap. A good re-quote says so.
The decision rule we use
Run China and the other viable origins at the real tariff stack for the 8-digit HTS code. Include the agent fee on every alternative. If one origin lands 10% or more below the current cost, pursue it. If two land within 5% of each other, decide on lead time, MOQ and risk — not price. If nothing beats the incumbent by 5%, keep the incumbent and fix the inspection plan.
Then put a date on every number and re-run it every quarter. The tariff stack has changed four times this year — the IEEPA tariffs struck on February 20, the Section 122 surcharge in from February 24 and out on July 24, the Section 232 reset on June 8, and the Section 301 action on July 24 — and a second Section 301 investigation into excess capacity is still open. The method hasn’t changed.
Whether you call the result nearshoring or a China plus one program depends on what the parts said, not on what the plan was called at the start.
Want this run on your parts? Send up to five SKUs and you’ll have a landed-cost comparison — China and other countries, named factories — in ten business days. Or try the landed-cost calculator first.