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


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 the supply-chain disruptions it caused, Russia’s invasion of Ukraine and the dueling 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 label for 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.  

US Treasury Secretary Janet Yellen has proposed friend-shoring as a means to insulate global supply chains from external disruption or economic coercion. The idea is for a group of countries with shared values to deploy policies encouraging companies to spread manufacturing within that group. The goal is to prevent less-like-minded nations from unfairly leveraging their market position in key raw materials, technologies or products to disrupt the US economy or those of its allies. It’s one of several twists of the term off-shoring -- the large-scale push by companies earlier in the century to move what operations they could to places where it was cheaper to operate. Another iteration is “re-shoring.”