Recent progress in manipulating atomic and condensed matter systems has instigated a surge of interest in nonequilibrium physics, including many-body dynamics of trapped ultracold atoms and ions, near-field radiative heat transfer, and quantum friction. Under most circumstances the complexity of such nonequilibrium systems requires a number of approximations to make theoretical descriptions tractable. In particular, it is often assumed that spatially separated components of a system thermalize with their immediate surroundings, although the global state of the system is out of equilibrium. This powerful assumption reduces the complexity of nonequilibrium systems to the local application of well-founded equilibrium concepts. While this technique appears to be consistent for the description of some phenomena, we show that it fails for quantum friction by underestimating by approximately 80% the magnitude of the drag force. Our results show that the correlations among the components of driven, but steady-state, quantum systems invalidate the assumption of local thermal equilibrium, calling for a critical reexamination of this approach for describing the physics of nonequilibrium systems.