Friend-shoring
Friend-shoring (also written friendshoring) is the practice of concentrating supply chains among trusted allies and partner countries rather than potential adversaries. Popularized by US Treasury Secretary Janet Yellen in 2022, it aims to make trade more secure and resilient, reducing dependence on rivals like China while keeping production with politically aligned partners such as Korea and Japan.
What is friend-shoring?
The term builds on onshoring (bringing production home) and nearshoring (moving it to nearby countries), but swaps the test of distance for a test of trust. Yellen set out the logic in her April 2022 “Way Forward for the Global Economy” address:
Favoring the friend-shoring of supply chains to a large number of trusted countries, so we can continue to securely extend market access, will lower the risks to our economy as well as to our trusted trade partners.
— Janet Yellen, U.S. Treasury Secretary, U.S. Department of the Treasury
The aim, in her words, was “free but secure trade” with countries the United States knows it can count on (U.S. Treasury). The driver was the pandemic and the war in Ukraine, which exposed how brittle single-source, adversary-dependent supply chains had become.
In practice, friend-shoring is the policy logic behind reshoring incentives like the US Inflation Reduction Act and the CHIPS Act, both of which favor production in the United States and allied countries. The trade data already shows the pattern. In 2025 the United States set record imports from 46 countries, led by Mexico at $534.9 billion, Taiwan at $201.4 billion, and Vietnam at $193.8 billion, with China conspicuously absent from the top of that list as importers rerouted sourcing toward trusted partners (U.S. Census Bureau).
It is not without critics. The Center for Strategic and International Studies has argued that trade often just gets rerouted through third countries and that allied production can still rely on Chinese inputs, limiting how cleanly supply chains can decouple (CSIS). A Taiwanese factory that finishes goods from Chinese components still moves the import statistic without moving the dependence.
Why does friend-shoring matter for investors?
It reshapes where industrial demand lands. When the goal is to source outside China but inside the alliance, manufacturers in trusted partner countries capture orders they might not have won on price alone. That is the structural tailwind behind the Korea Manufacturing Core Alliance theme, where Korean leaders in AI memory, batteries, ships, defense, and grid equipment are positioned as preferred allied suppliers.
Related terms & concepts
FAQ
Who coined the term friend-shoring?
US Treasury Secretary Janet Yellen popularized friend-shoring in 2022, describing it as 'deepening relationships and diversifying our supply chains with a greater number of trusted partners' to lower risk for all sides (CNBC).
How is friend-shoring different from reshoring and nearshoring?
Reshoring brings production back to the home country and nearshoring moves it to nearby countries, while friend-shoring routes supply chains to trusted allies regardless of distance, prioritizing political alignment over geography (CNBC).
Does friend-shoring actually work?
Analysts are mixed. Critics note that trade often just gets rerouted and that 'friends' can still depend on Chinese inputs, so the Center for Strategic and International Studies has flagged real limits to how far friend-shoring can decouple supply chains (CSIS).
Sources & references
- Yellen says the U.S. and its allies should use 'friend-shoring' to give supply chains a boost · CNBC, 2022-07-19
- The Limits of 'Friend-Shoring' · Center for Strategic and International Studies, 2023-01-01
- Remarks by Secretary of the Treasury Janet L. Yellen on Way Forward for the Global Economy · U.S. Department of the Treasury, 2022-04-13
- U.S. International Trade in Goods and Services, Annual 2025 (Press Highlights) · U.S. Census Bureau, 2026-02-19