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What ‘Friend-Shoring’ Means for Trade in a Less-Friendly World

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Over the past few years, the world has experienced an escalating series of trade disruptions: the US-China trade war, the Covid-19 pandemic and its supply chain disruptions, Russia’s invasion of Ukraine and the sanctions and export controls that followed. Their cumulative impact has called into question the vision of a globalized economy. In response, some US officials are pushing “friend-shoring” — a happy-sounding name for a policy that would lead to a world divided between free-market democracies and countries that align with the authoritarian regimes of China or Russia. It’s a world in which supply chains could be more robust and less subject to economic blackmail. It’s also likely a world that’s poorer and less productive.  

Just as offshoring means moving work overseas to where production costs are low, friend-shoring means encouraging companies to shift manufacturing away from authoritarian states and toward allies. The goal is to prevent nations like China and Russia from leveraging their market advantages in key raw materials (such as “rare earth” minerals and magnets), products (energy, food, fertilizer) or tech-industry inputs to disrupt the US economy. Friend-shoring can be seen as a less extreme version of “reshoring,” or bringing key manufacturing processes back to within your own country’s borders. An early test of both strategies has come with electronics manufacturing.