PS. Even now, not all manufacturing is done in China.
"People who trust only you" is to managers as "code nobody else understands" is to engineers: job security, and a springboard for making you look like a hero and so getting you recognition/promotions. And it's hard to develop relationships like that, if you can't just wander over to those people and have in-person (i.e. not on-the-record in the company's logs) conversations.
To exactly the degree that your company resembles a feudalist society, you'll see managers excited to have their own physically distinct office units/departments/working groups, where they can most-effectively hoard and develop private talent pools on the company's dime. And you'll see them heavily resist anything that makes that talent-pool of theirs less private, e.g. WFH, cross-departmental collaboration, "war rooms" during emergencies, etc.
There are certainly opportunities where workers in developing countries can do the same job for substantially less money, but very few companies do the hard work of really integrating these workers with their existing teams so it's just colonialism 2.0 where westerners who are trusted by management are told to create robotic tasks for the cheap labor in such a way that no one can meaningfully fuck it up. It creates a predictable result.
On more of a 25-50 year perspective, it has always been impossible for the majority of the world to be lifted out of poverty without those people eventually competing with us. The 20th century economic advantage and resulting broad equality of prosperity in the US and western Europe was a historical fluke of right place, right time that will likely never be repeated. I expect developed countries to start looking a lot more like developing countries do now in terms of economic equality.
I started my career in Poland, just before the foreign startups decided it's an interesting market to outsource to. A number of US owned startups and medium-sized tech companies started offering salaries 2-3x higher than the local firms. I moved from a place where my last conversation was "No web developer can hope for more than $4/h rate, come on" to, well, a $10/h place. A lot of this was made easier by EU, a lot was just US companies being encouraged by the economic growth, stability and the prospect of saving the half of their bottom line. With salaries at ~$20-30k a year everyone was happier than before.
Then a natural thing happened, the market became increasingly competitive. Ten years later, a good senior developer in Poland could earn $60k, but crucially, costed the company close to $100k due to employer taxes and other costs of running business. Some companies are fine with it, but some understand that it's ever closer to what an employee in their HQ costs, and some are slowing down the growth or moving out alltogether. Surprise, over-the-pond communication is not so easy even on a good day, and there are cultural differences to deal with too. Some moved further east, I'm curious to see how that plays out.
Going back to the remote work pushing down the salaries, I think that's unlikely to be the reason, because lower wage locations are rarely saving that much in the long run. Maybe we see a temporary dip, but I also look forward to moving out of big city and lowering my cost of living.
What I think is more likely is that the economy shrinks and the endless supply of engineering jobs dries out, moving us back to employer's market. That can have all kinds of ripple effects on the local and outsourced jobs.