U.S. officials and allies around the world are looking to establish friendly supply routes for key goods amid a war and global pandemic
Source: Wall Street Journal
Nations Aim to Secure Supply Chains by Turning Offshoring Into ‘Friend-Shoring’ – WSJ
As war and the pandemic expose the fragility of supply chains, the U.S. and its allies are pursuing a new kind of global trade, one that confines commerce to a circle of trusted nations. Fans call the shift “friend-shoring.”
The new strategy is a departure from economic globalization of recent decades, when businesses bought and made products where costs were low and free-trade policies made moving goods around the world cheaper and faster.
Now, U.S. officials and their allies in Europe, Asia and the Pacific are promoting and funding new production and trading channels for essential goods that run though friendly nations. Companies including Samsung Electronics Co. and Gap Inc. are tapping into this trend. It comes after a series of disruptions, including the Covid-19 pandemic, Russia’s invasion of Ukraine, and a trade war between the U.S. and China.
Promoters of friend-shoring see it as a chance to revamp global supply chains to reduce their reliance on countries with autocratic governments and nonmarket economies, namely China and Russia. They say it is a compromise between full-fledged globalization and isolationism, and between offshoring and domestic production.
Efforts are already under way in industries including semiconductors and rare-earth metals, a crucial input for electric vehicles and missiles. Private companies are joining the fray as well, moving to increase production in countries they see as carrying relatively low political and logistical risk.