4 days ago
Trump's Tariffs and the Risk of Reverse Friendshoring
Under pressure from U.S. tariffs and protectionism, what if firms, rather than moving away from China, begin repositioning themselves closer to it?
Over the past few years, the United States has embraced the concepts of nearshoring and friendshoring – relocating supply chains away from China and toward the U.S., its allies, or nearby countries. The goal was to reduce dependence on a strategic rival, strengthen domestic industry, and align supply chains with geopolitical partners.
Initially, this strategy showed promise. Investments flowed into Mexico, Vietnam, and India as Washington offered incentives and business executives recalibrated risk maps.
But now, with the resurgence of tariff wars and mounting protectionist pressure, especially under President Donald Trump's renewed rhetoric, this strategy faces a paradoxical risk: a reversal. In other words, what if companies begin to do the opposite of what the U.S. intended? What if firms, rather than moving away from China, begin repositioning themselves closer to it?
There is a growing concern among multinationals that the U.S. market may become more volatile and less accessible if tariffs persist. If the cost of operating or exporting into the United States rises significantly, some companies might start to see Asia not only as a manufacturing base but as the main market to bet on. In this context, companies may decide to expand operations near China, taking advantage of mature supply chains and the opportunity to serve a vast, growing consumer market.
Several cases already hint at this trend. One major firm that previously relied on U.S. ports to access North America shifted its operations to Canada to avoid compounded tariffs. Another company had invested heavily in Mexico as part of its strategy to reduce exposure to China. However, when Mexico was suddenly targeted by new Trump-era tariffs, the firm pivoted. Rather than using its Mexican facility to serve the U.S., it redirected its exports to Latin American and South American markets.
The logic is simple: when the U.S. becomes a bottleneck, companies diversify away from it. The unintended consequence is a reverse friendshoring, one that pushes supply chains back toward Asia.
This phenomenon is more than a tactical response. It could represent a structural shift in global trade. If U.S. tariffs become a long-term reality, many multinationals will strengthen their presence in Asia, including in China-adjacent economies. This would be a strategic setback for the United States, which originally aimed to 'decouple' from Chinese influence.
It's worth remembering that this aggressive protectionism is not historically American. For decades, especially after World War II, the U.S. championed open markets, leading the creation of GATT, the WTO, and free trade agreements across the globe. It saw liberal trade as a source of strength and leadership. The shift toward 'America First' protectionism, especially under Trump, disrupted this legacy. And while some short-term political gains were achieved, the long-term costs, especially in credibility and stability, are becoming more visible.
Protectionism may offer a temporary illusion of control, but in the long run, it risks pushing businesses away. If global firms come to see the U.S. as unpredictable or commercially hostile, they will turn to where predictability and demand still thrive. Asia, with its integrated supply chains and pro-business environments, becomes the natural alternative.
But there's a deeper irony. By pushing companies back toward Asia, especially China, the U.S. may be reinforcing the very dependency it sought to undo. While relocating closer to China may offer efficiencies, it also strengthens Beijing's strategic hand. China has long made it clear: its goal is to make the world more dependent on it while reducing its own vulnerabilities. That's a dangerously asymmetric relationship. As Europe learned with Russian gas, overdependence on an authoritarian power can quickly turn into leverage used against you.
This is why Southeast Asia and Central Asia are positioning themselves aggressively. Vietnam has already emerged as a winner of the China-U.S. trade war, becoming one of America's top trade surplus partners. Indonesia, Thailand, and Malaysia are rapidly improving infrastructure, workforce readiness, and regional trade deals like the RCEP to attract more industrial investment. Central Asian countries like Kazakhstan and Uzbekistan, long dominated by Russia and China, now see an opening. By offering access to emerging supply corridors like the Trans-Caspian route, they aim to attract diversified Western investment.
In short, if the United States doubles down on isolation, others will gladly step in. The global gameboard is shifting. Reverse friendshoring is no longer a hypothetical – it's a scenario being quietly sketched out in boardrooms from Singapore to São Paulo.
The question is no longer whether the U.S. can bring supply chains back home. The question is: will its current posture drive them even further away?
