For three decades following the end of the Cold War, the dominant logic of the global economy was comparative advantage pursued without constraint. Goods were manufactured wherever was cheapest, supply chains were optimised relentlessly for efficiency, and the assumption of geopolitical stability meant that resilience was rarely purchased at the expense of cost. China became the world's manufacturing floor; global logistics companies flourished; and consumers in developed markets benefited from a sustained suppression of goods price inflation.
That model has been under sustained pressure since the mid-2010s, and the stresses have intensified markedly. US-China trade tensions, the supply chain disruptions of the Covid-19 pandemic, Russia's invasion of Ukraine and the consequent energy shock, and a broader reassertion of strategic competition among major powers have all contributed to a structural rethinking of where and how things are made.
The consequence — which investment professionals call deglobalisation, or more precisely, reshoring and near-shoring — is reshaping capital flows, creating new industrial geographies, and generating clear winners and losers among sectors and companies. For internationally mobile HNW investors, understanding this transition is increasingly important for portfolio positioning.
Defining the Shift: Reshoring, Near-Shoring, and Friend-Shoring
These terms are often used interchangeably but have different specific meanings.
Reshoring refers to the return of manufacturing and supply chain activities to a company's home country. A US company moving production from China back to the United States is reshoring. The motivation is typically a combination of national security concerns, tariff avoidance, or a reassessment of the true costs of distant supply chains (quality control, intellectual property risk, logistics lead times, disruption exposure).
Near-shoring refers to the relocation of production to geographically proximate countries rather than necessarily the home country. European companies near-shoring move production to Eastern Europe, North Africa, or Turkey. US companies near-shore to Mexico, Central America, or the Caribbean. The goal is reduced logistics costs, lower disruption risk, and cultural or time-zone proximity, while retaining some cost advantage over domestic production.
Friend-shoring is a term popularised by US Treasury Secretary Janet Yellen and refers to the deliberate redirection of trade and supply chains towards politically aligned or trusted partner nations. The logic is explicitly geopolitical: reducing dependence on adversarial or unstable suppliers in favour of allies. India, Vietnam, Mexico, and certain Eastern European nations have emerged as principal beneficiaries of friend-shoring flows from Western companies.
Policy Drivers: IRA, CRMA, and Tariff Frameworks
Government policy is accelerating private-sector decisions. The US Inflation Reduction Act (IRA), passed in 2022, contains significant domestic content requirements for clean energy products to qualify for its substantial tax credits. Electric vehicles, solar panels, and batteries must use materials extracted or processed in the US (or Free Trade Agreement partners) to attract maximum incentives. This is explicitly designed to build domestic supply chains for critical sectors.
The EU's Critical Raw Materials Act (CRMA), implemented from 2024, establishes targets for domestic mining, processing, and recycling of materials deemed critical for the green and digital transitions. The ambition is to reduce EU dependence on Chinese-controlled supply chains for rare earths, lithium, magnesium, and other materials. It does not mandate immediate supply-chain changes but creates clear policy direction for investment decisions.
Tariff frameworks — both existing and threatened — remain a powerful incentive for reshoring. US tariffs on Chinese goods, introduced in 2018 and maintained or extended by subsequent administrations, have materially increased the cost of Chinese manufacturing for companies selling into the US market. The prospect of further tariffs (including the broad tariff proposals that have been a feature of US political debate through 2025–2026) keeps supply-chain restructuring on corporate boardroom agendas.
The New Manufacturing Geographies: Winners
India: the most prominent friend-shoring beneficiary. Apple's significant and growing production of iPhones in India — via suppliers Foxconn, Pegatron, and Tata Electronics — is the highest-profile symbol of a broader shift. India offers a combination of low labour costs, a large and growing domestic market, improving infrastructure, and improving political alignment with Western nations. Manufacturing FDI into India has grown significantly and the government's Production Linked Incentive (PLI) scheme is accelerating sector-specific capacity building.
Vietnam: has been the largest beneficiary of US-China trade diversion over the past five years. Electronics assembly, footwear, apparel, and increasingly technology hardware have shifted from China to Vietnam. Samsung manufactures a significant portion of its smartphones there; Apple suppliers have expanded Vietnamese capacity. Vietnam is limited by infrastructure constraints and a smaller labour force than India or China, but it is a clear structural winner.
Mexico: the USMCA trade agreement makes Mexico an attractive near-shoring destination for the US market. Automotive manufacturing, electronics, and medical devices are all expanding. The proximity to the US allows for just-in-time supply chains that are impossible with Asian production. Nearshore services — technology, business process outsourcing — are also growing.
Poland and Central/Eastern Europe: within the EU, Poland, Romania, and the Czech Republic are attracting manufacturing relocating from Asia for the European market. Automotive supply chains, electronics, and pharmaceuticals are all relevant.
Winner Sectors and Companies
Automation and robotics: as labour costs rise in reshored locations relative to China, companies invest in automation to remain competitive. Fanuc, Rockwell Automation, ABB, and Cognex are among the companies supplying manufacturing automation technology. The re-industrialisation theme increases demand for their products.
Domestic manufacturing and industrial companies: companies producing capital goods, industrial machinery, and infrastructure equipment for domestic markets benefit from the reshoring investment wave. European and US capital goods makers, electrical equipment manufacturers, and engineering companies are well-positioned.
Defence and security: friend-shoring has an explicit security dimension. Defence industrial capacity in NATO countries is expanding (see also our defence sector guide). Allied nations are investing in domestic production of munitions, vehicles, and electronics.
Power and energy infrastructure: manufacturing reshoring requires electricity. Data centres require electricity. EV charging infrastructure requires electricity. Grid investment is rising sharply across the developed world, benefiting electrical equipment manufacturers, grid operators, and utility-scale power generators.
Loser Sectors and Companies
Global logistics and shipping: the optimised global supply chains of the 2000–2020 era were a gift to container shipping companies, port operators, and global freight brokers. Shorter supply chains require less shipping, though they do not eliminate it. Margin pressure on long-haul logistics is a reasonable expectation over the medium term.
Low-cost Chinese manufacturers: companies that built competitive positions on the assumption of frictionless access to global (particularly Western) markets face sustained headwinds from tariffs, domestic content requirements, and explicit supply-chain exclusion in strategic sectors. This is particularly acute in solar panels, electronics, and electric vehicles.
Companies with high supply-chain China concentration: multinationals that have not yet diversified their China manufacturing exposure face ongoing risk of tariff escalation and potential consumer-side reputational pressure in some markets.
Portfolio Positioning
The deglobalisation thesis supports several portfolio tilts:
- Overweight automation and capital equipment: the industrial revolution of reshoring requires machines
- Overweight select emerging markets as friend-shoring beneficiaries: India and Vietnam in particular
- Overweight power and grid infrastructure: the electricity demand from reshored manufacturing and digital infrastructure is structural
- Underweight or be cautious on global logistics where margins depend on long, optimised supply chains
- Monitor commodity implications: reshoring increases demand for domestically produced inputs, supporting certain commodity producers
The thesis is structural in nature and should inform long-run portfolio positioning rather than short-run trading decisions. It can be accessed through thematic ETFs (industrial, automation, emerging markets) or through active fund managers with an explicit reshoring framework.
Values can fall as well as rise. This article does not constitute investment advice. Forecasts and thematic analyses are inherently uncertain and may not materialise as expected.
How Global Investments Can Help
Our advisory team takes a long-run, structurally-grounded approach to portfolio construction for internationally mobile HNW clients. We help translate macro-level investment themes — including deglobalisation — into practical, diversified portfolio decisions that are appropriate for your tax residency, time horizon, and risk appetite.
Contact our team to discuss how your portfolio is positioned for the reshaping global economy.
This article is for general information only and does not constitute financial, legal or tax advice. Rules, prices and regulations change; verify current requirements with a qualified adviser before acting.