With the huge turmoil in the global trade environment over the past few months and traditional alliances coming under increased pressure, many companies around the world will be looking at their established supply chains to identify new markets and potential suppliers that can offer more flexibility at a time when trade barriers are increasing.
One solution for this is to take advantage of efforts by governments around the world to focus on 'friendshoring' as part of their trade policy. This strategy has been gathering interest in recent years, especially in the wake of disruptions like COVID-19 and growing trade disputes between the world's largest trading nations.
But in a more disruptive environment, does this still hold the same promise it did a few years ago? Let's take a look at the state of friendshoring in the second half of 2025 and some of the challenges or opportunities it can create.
Understanding friendshoring and nearshoring in 2025
Friendshoring refers to efforts to increase trade ties between partners that are politically and culturally aligned. In recent years, it was a key focus of the Joe Biden administration as it sought to reduce the US' reliance on China at a time of growing political tensions. Benefits of this include the promise of more resilience and security in the supply chain and improved efficiency, due to the fact that compliance regulations are likely to be in closer alignment.
This compares with similar practices such as nearshoring, which is less politically motivated, but instead focuses on links between countries that are geographically close to each other, as is the case with the close relations between the US, Canada and Mexico. This offers advantages such as faster speed to market and minimizing issues such as shipping disruption.
In Donald Trump's second term, however, the US' efforts in both of these areas have reduced as the president takes a more transactional approach to trade. Disputes with Canada, Mexico and the EU, for example, have led to trade agreements being heavily disrupted by new tariff barriers.
This perhaps lends credence to the warnings offered by World Trade Organization director-general Ngozi Okonjo-Iweala, who warned last year: "A friend today may not be a friend tomorrow."
What could the impact of new economic blocs be?
With relations between many countries and the US strained, some nations are looking at building new trading blocs based on shared values in order to minimize disruption and take advantage of emerging opportunities.
One of these new partnerships is in the Middle East, where the Gulf Cooperation Council (GCC) - consisting of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates - has looked to work together to build a bloc that can be at the heart of world trade.
It was recently noted by the World Economic Forum (WEF) that a range of friendshoring-focused measures have been introduced to reduce costs and provide business incentives. These include Special Economic Zones that offer competitive corporation tax rates and duty-free access to GCC markets.
"As more companies embrace friendshoring, member states are working proactively to capitalize on these constructive relations," the WEF noted.
However, the emergence of such blocs is not without its risks. European thinktank the Centre for Economic Policy Research (CEPR), for example, stated that this could lead to greater fragmentation of world trade, which in turn could "hinder global economic integration and cooperation, potentially exacerbating geopolitical tensions".
A recent increase in protectionist measures adopted by several countries in response to this may also reduce efficiency and raise costs for global trade. The CEPR said: "Navigating the current geopolitical forces may therefore require careful consideration of the trade-offs between protecting domestic industries and maintaining open and interconnected global markets."