Friend- and Near-Shoring in Factories America, Asia, and Europe amid Rising Geopolitical Tensions

This paper empirically investigates changes in import sourcing patterns across three major production hubs: Factory America, Factory Asia, and Factory Europe. Specifically, using the international trade data by 2023, we examine three types of “shoring” strategies: near, economic friend, and political friend. In addition to aggregate trade flows, we analyze these patterns for select categories of goods, including green goods, critical raw materials (CRMs), and semiconductors. Our findings provide quantitative evidence of an increasing reliance on political friend-shoring in global trade under conditions of heightened geopolitical risk, whereas both economic friend-shoring and near-shoring appear to be weakening. We also identify variation across regions and product types. For instance, no evidence of near-shoring in the semiconductor sector may reflect Factory Asia’s continued central role in global semiconductor supply. Moreover, the accelerated political friend-shoring of CRMs in Factory Europe likely reflects a growing emphasis on securing stable access to these strategically vital materials.