Friendshoring Policy

Friendshoring (sometimes called ally-shoring) describes a deliberate policy choice to concentrate trade, sourcing, and foreign direct investment among countries that share strategic, security, or values-based alignment. It sits between onshoring (returning production home) and nearshoring (relocating to geographically close states), and is typically framed as a response to supply-chain shocks, export controls, and great-power competition.

The term entered mainstream policy discourse in 2022, when U.S. Treasury Secretary Janet Yellen used it in an April speech at the Atlantic Council and in subsequent remarks at LG Sciencepark in Seoul, arguing that the United States should deepen trade integration with "a large group of countries we can count on." It built on earlier concerns following pandemic-era shortages of semiconductors, pharmaceuticals, and personal protective equipment, and on rising tensions with China and Russia after the invasion of Ukraine.

In practice, friendshoring overlaps with several concrete instruments:

• The U.S. CHIPS and Science Act (2022), which subsidizes domestic and allied semiconductor production while restricting recipients from expanding advanced fabs in China.
• The Inflation Reduction Act (2022) electric-vehicle tax credits, which condition benefits on critical-mineral sourcing from the U.S. or free-trade-agreement partners.
• The Indo-Pacific Economic Framework (IPEF) supply-chain pillar, signed in 2023.
• EU de-risking language adopted by the European Commission in 2023, and the Critical Raw Materials Act.

Critics argue friendshoring fragments global trade, raises consumer costs, and risks creating rival economic blocs in tension with WTO most-favored-nation principles. The IMF has warned in its World Economic Outlook analyses that geoeconomic fragmentation could measurably reduce global GDP. Developing countries outside core alliance structures, particularly in Africa and parts of Southeast Asia, have expressed concern about exclusion from reorganized value chains, while states such as Vietnam, Mexico, and India have positioned themselves as beneficiaries.