Will Trade Uncertainty Boost Automation?

Deepika Baskar Prabhakar, Hamid Firooz (), Sylvain Leduc and Zheng Liu

FRBSF Economic Letter, 2025, vol. 2025, issue 20, 6

Abstract: Recent surges in trade policy uncertainty highlight the fragility of global supply chains, prompting businesses to consider reshoring—moving production from abroad to domestic locations. Reshoring can be costly, creating incentives for businesses to automate. Evidence suggests that businesses facing heightened trade policy uncertainty in industries more exposed to international trade reshore more and automate more than those that are less exposed to trade. Automation appears to help mitigate the otherwise negative effects of trade policy uncertainty on production and labor productivity.

Keywords: trade; trade uncertainty; automation; reshoring; trade agreements (search for similar items in EconPapers)
Date: 2025
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