The US 'friendshoring' experiment risks making enemies

Favouring political allies when constructing supply chains is expensive, tricky and possibly self-defeating.

A resident cleans dust off of a vehicle from semi-trucks in the Wilmington area of Los Angeles, on July 12, 2022. PHOTO: BLOOMBERG
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(FINANCIAL TIMES) - It wasn't just US observers who were surprised and intrigued last week when West Virginia Senator Joe Manchin remembered his hitherto largely nominal party affiliation and cut a constructive deal with the Democratic Senate leadership on climate and clean energy policy.

Viewed from abroad, the agreement is also notable for proposing one of the first apparently genuine examples of "friendshoring" - favouring strategic allies when building supply chains - seen in the wild. It has delighted Canadian automakers by extending a tax credit to electric vehicles (EVs) assembled in North America, not just the United States. It also favours battery minerals processed by economies with which the US already has preferential trade deals.

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