Markets

The big re-shoring puzzle

Our specialists discuss trade, security and what’s shaping the world economy.

02 Jul 2026 . 27 min

Since 2020, governments across the US, Europe and the UK have promoted re-shoring, near-shoring and friend-shoring as ways to strengthen supply chains, create jobs and reduce strategic dependence on China.

But how much of this shift is genuinely bringing industry home, and how much is simply reorganising global trade?

In this episode of Trade Links, Tim Phillips is joined by Aastha Gupta and Scott Livingstone to separate the headlines from the underlying data. In this episode:

Is re-shoring really happening?

Aastha explains how industrial policies such as the US CHIPS Act and Inflation Reduction Act have channelled hundreds of billions of dollars into semiconductors, electric vehicles and clean technology.

However, the evidence suggests that the re-shoring story is more complicated than political messaging implies:

Many supply chains remain heavily dependent on imported components.
Production is often being rerouted through intermediary countries such as Vietnam and Mexico rather than returning home.
New investment frequently represents additional capacity rather than relocation of existing manufacturing.
Foreign firms are increasingly establishing local operations in Europe and North America.

The result is less a wholesale return of manufacturing and more a gradual reconfiguration of global supply chains.

The jobs question

Large investment announcements often promise tens of thousands of jobs, but the panel highlights an important distinction between construction employment and long-term operational jobs.

Capital-intensive sectors such as semiconductor fabrication, battery production and clean technology require enormous upfront investment but relatively modest permanent workforces.

The discussion asks whether today’s industrial policy is delivering broad-based reindustrialisation or simply targeted support for strategically important sectors.

Friend-shoring: Trading with trusted partners

Scott explores the rise of friend-shoring, where countries prioritise reliability, integrity and political dependability over lowest-cost suppliers.

Examples include:

US–Vietnam trade ties
Europe’s engagement with Saudi Arabia
UK partnerships focused on critical minerals

The conversation examines how governments increasingly define “friends” through commercial resilience and strategic interests rather than shared political systems.

The costs of resilience

Re-shoring and friend-shoring may strengthen supply security, but they also come with trade-offs.

Economic costs include:

Higher production costs
Significant public subsidies
Potential inflationary pressures
Reduced efficiency from fragmented supply chains

Political challenges include:

Greater fragmentation of the global trading system
Managing increasingly transactional international relationships
Questions over credibility when values-based foreign policy collides with commercial interests

US–China relations: Spin versus substance

The panel also revisits recent US–China engagement following President Trump’s visit to Beijing and ahead of a planned follow-up meeting in September.

Key questions include:

Was the visit a diplomatic success for both sides?
Did any meaningful structural agreements emerge?
Could September bring progress on tariffs, rare earths or technology controls?

The panel concludes that recent engagement has largely focused on stabilising tensions rather than resolving fundamental disputes.

What to watch

Aastha’s radar: The growing use of “shadow fleets” transporting sanctioned oil from Russia and Iran is creating an increasingly opaque parallel trading system, raising questions about sanctions effectiveness and transparency in global commerce.

Scott’s radar: Military exercises around Taiwan and in the Baltic Sea this summer warrant close attention. Demonstrations of capability by Taiwan, China, NATO and Russia all carry the risk of misinterpretation and unintended escalation.

Speakers

Host: Tim Phillips

Guests: Aastha Gupta (European Economist)

Scott Livingstone (International Advisor)

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This episode was recorded on 17 June 2026.

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