In recent years, global trade has faced a seismic shift. Between the COVID-19 pandemic, geopolitical tensions, and the growing need for integrating ESG standards into international commerce, governments and corporations have started to rethink where and with whom they do business.
This is where friendshoring comes in; since it prioritizes economic partnerships with countries considered “friendly” or politically aligned. Unlike traditional globalization, which focused mainly on cost efficiency, friendshoring emphasizes trust, shared values, and stability.
But what exactly does it mean, how does it work, and why does it matter? In this article, our team of Mexican customs brokers will break down the concept of friendshoring, explore its benefits and challenges, and look at real-world examples that show how it’s redefining international trade.
What is friendshoring?
As we mentioned, friendshoring refers to the practice of relocating supply chains, manufacturing, and trade partnerships to countries that share similar political values, economic systems, or strategic alliances.
The idea is simple: rather than depending on nations that may pose geopolitical or security risks, companies and governments prioritize trade relationships with “friendly” countries, those considered reliable and aligned in terms of values, regulations, and long-term stability.
The term gained prominence in the early 2020s, particularly after U.S. Treasury Secretary Janet Yellen used it to describe a new approach to global trade. Her statement emphasized the need to create “trusted networks” of economic partners to reduce vulnerabilities exposed by events such as the COVID-19 pandemic, the U.S.–China trade tensions, and the war in Ukraine. These crises revealed how dependent many economies had become on a handful of suppliers located in politically unstable or adversarial regions.
At its core, friendshoring represents a shift away from the hyper-globalized model that dominated the late 20th and early 21st centuries. Instead, it seeks a balance between economic efficiency and national security, encouraging production and sourcing within alliances that minimize risk.
How does friendshoring work?
Even though this new approach seems easier, it is not; friendshoring operates through a combination of economic policy, corporate strategy, and international diplomacy. At its core, it’s about building trade networks based on trust and shared political alignment rather than purely on cost efficiency.
Governments play a key role by setting incentives, signing bilateral or multilateral agreements, and identifying strategic sectors where friendshoring can enhance resilience. Meanwhile, companies adjust their supply chains to source materials and manufacture in countries that are considered politically stable and aligned with their home nation’s interests.
The first and main step in implementing friendshoring is identifying “friendly” nations. These may be formal allies (such as NATO members) or close economic partners that adhere to international norms.
For instance, the United States has encouraged companies to move parts of their production from China to Mexico, Canada, or other democratic economies in Asia. This not only reduces exposure to geopolitical risks but also fosters economic interdependence among nations with aligned interests.
We know that for restructuring supply chains or any other part of a company’s operation, they may choose to relocate factories, diversify suppliers, or establish new logistical routes. This often involves significant investment and time, as it requires rebuilding networks that were optimized for cost rather than political security. To support these shifts, governments may offer tax breaks, infrastructure funding, or trade facilitation measures to encourage private firms to participate.
Benefits of friendshoring
Now that you learned more about friendshoring, it’s time to talk about its pros. It offers several strategic and economic benefits that go beyond simple supply chain adjustments. Hereunder are some of the most important advantages.
1.- Strengthening supply chain resilience
One of the most significant benefits of friendshoring is the enhancement of supply chain resilience.
By relocating production and sourcing to trusted partners, countries and companies reduce their dependence on politically unstable or adversarial regions. Friendshoring ensures that disruptions in one location don’t bring entire industries to a halt.
2.- Reducing geopolitical and security risks
Friendshoring also helps reduce geopolitical and security risks. In an increasingly polarized world, trade relationships are no longer just economic decisions; they are also strategic ones.
Partnering with countries that share similar political systems and regulatory standards minimizes the likelihood of sudden sanctions, export bans, or diplomatic conflicts. This approach provides both governments and corporations with greater predictability and stability for long-term planning and investment.
3.- Strengthening alliances and diplomatic cooperation
Another benefit of friendshoring is its potential to strengthen alliances and foster political cooperation. When nations build economic ties based on mutual trust, they reinforce diplomatic relationships and create shared incentives for stability.
4.- Enhancing ethical and sustainable trade practices
From a business perspective, friendshoring can improve brand reputation and ethical accountability. Companies that align their supply chains with nations upholding labor rights, environmental protection, and transparent governance demonstrate a commitment to responsible production.
Consumers and investors increasingly value ethical sourcing and sustainability, making friendshoring a competitive advantage for firms aiming to strengthen their corporate social responsibility.
5.- Promoting innovation and technological collaboration
Last but not least, friendshoring encourages innovation and technological cooperation among trusted partners. This strategy makes it easier for countries to collaborate on research, development, and standardization. These partnerships enhance competitiveness while reducing the risk of intellectual property theft or misuse.
Now that you’ve learned more about friendshoring, contact us; we will help your company to reach new and friendly markets. Also, don’t forget to share this article on social media and stay tuned to our blog for more updates.
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