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Will Trade Uncertainty Boost Automation?

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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.

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  • Deepika Baskar Prabhakar & Hamid Firooz & Sylvain Leduc & Zheng Liu, 2025. "Will Trade Uncertainty Boost Automation?," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, vol. 2025(20), pages 1-6, September.
    • Handle: RePEc:fip:fedfel:101566
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