‘Friendshoring’ sounds nice, but who are America’s true friends?

To think we only do business with friends is a fallacy.

As the world’s market-oriented democracies struggle to peacefully decouple from their authoritarian rivals, their trade dialogue sounds increasingly like insecure middle-schoolers: minerals clubs, resilience and “friendshoring.” That’s not much of a guide for real-world economic policy.

Friendshoring sounds nice but remains ill-defined: Who, even, are our friends in the trade world? We’ve had disputes over trade matters recently with Canada and the European Union, after all. 

Still, the term is being used a lot these days. In the weeks after Treasury Secretary Janet Yellen coined it in April 2022, Google trends show that there was a sharp uptick in searches.

Friendshoring is not in the Merriam-Webster dictionary, but the World Economic Forum has called it “a growing trade practice where supply chain networks are focused on countries regarded as political and economic allies.” Wikipedia defines it as "the act of manufacturing and sourcing from countries that are geopolitical allies."

This makes some sense, yet terms like “geopolitical ally” can be similarly vague. Political scientists have long used it to describe countries that share the same understanding of how to use power or countries that have a formal agreement or a promise to support one another in times of war. After World War II, the term was often used to describe Western countries that aimed to preserve the relative peace that’s been referred to as the Pax Americana.

The United States has been the world's dominant leader in terms of economic, cultural and military power, and while that may continue, geopolitical alliances are complicated by the rise of China. It was once quite clear which nations were aligned with the Pax Americana view of things and which were not. But it’s less clear now.

China, which does not subscribe to the idea of a Pax Americana, has become one of the largest trade and investment partners for many countries around the world, including otherwise U.S.-aligned democracies. With its authoritarian regime, strict control by the Chinese Communist Party and rapidly advancing and increasingly aggressive military, the shift in geopolitics and various levels of tolerance for it by different countries is hard to ignore.

In other words, for a long time, it was probably accurate enough to say that on the international stage, a friend was simply a country that would stand by our side in a time of war. But with geopolitics and economics becoming so intertwined, it’s not that simple. That makes friendshoring — which would have been a vague concept in just about any era — even less viable today than it may have been a few decades ago.

To think we only do business with friends is a fallacy. Mexico is one of our largest trade and investment partners. But do friends suddenly change their minds about the terms of one of our largest and most important bilateral trade flows, as that nation did not long ago? 

We've relied on authoritarian Saudi Arabia for decades for critical energy needs. Do friends murder journalists and long-term residents of the United States? 

The batteries in our electric vehicles contain cobalt, most of which is produced in the Democratic Republic of Congo. Do friends stand by as its citizens experience horrific human rights violations?

“Nations don’t have friends; they have interests,” said the late French president Charles de Gaulle. Business and friendship don’t mix. And they don’t need to. Millions of decisions are made every single day by U.S. businesses with other private actors around the globe voluntarily. 

Policymakers should set and enforce strong and clear rules on trade and investment that reflect legitimate national security concerns. Friendshoring sounds nice, but it is not realistic.

Christine McDaniel is a senior research fellow with the Mercatus Center at George Mason University.