Friendshoring Putting Upward Pressure on Costs of Production

Apollo Chief Economist

US imports from Europe and UK have been rising, and US imports from China have been declining. And foreign direct investment between the US and Europe is increasing. These trends reflect the ongoing segmentation of global trade with more onshoring and friendshoring, in particular among OECD countries. The market implication of deglobalization is more structural upward pressure on inflation, complicating the Fed’s job of getting inflation back to the 2% target.

US imports from China vs EU+UK
Source: Census, Haver Analytics, Apollo Chief Economist
FDI between US and Europe coming back
Source: BEA, Haver Analytics, Apollo Chief Economist

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