friendshoring

First we had offshoring, the transfer of the production of goods out of the country of origin to other countries where the cost of production is lower and the workers are less empowered. This was a big part of the global economy. It had the effect, for example, in the U.S. that the number of people employed in manufacturing dropped from almost 16 million to just over 10 million.  This caused some resentment, but companies are beholden to their shareholders and no one else.

Then tensions developed between the U.S. and China, and China demonstrated that it could use trade to make a point. Suddenly offshoring in China didn’t seem like such a great idea.  But instead of reshoring, companies found friendshoring to be the solution.  They moved their production to countries considered to be well-disposed to them.  Some manufacturing in China was moved to Vietnam, for example.  Janet Yellen is seen here making friendly overtures. For the moment friendshoring is the perceived way out of current difficulties.