Reshoring, automation, and labor markets under trade uncertainty

Hamid Firooz, Sylvain Leduc, Zheng Liu · Journal of International Economics · 17 Apr 2025

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Abstract

We study the implications of trade uncertainty for reshoring, automation, and U.S. labor markets. Rising trade uncertainty creates incentives for firms to reduce exposure to foreign suppliers by moving production and distribution processes to domestic producers. However, we argue that reshoring does not necessarily bring jobs back to the home country or boost domestic wages, especially when firms have access to labor-substituting technologies such as automation. Automation improves labor productivity and facilitates reshoring, but it can also displace jobs. Furthermore, automation poses a threat that weakens the bargaining power of unskilled workers in wage negotiations, depressing their wages and raising the skill premium and wage inequality. Our model predictions are in line with industry-level empirical evidence.

About this publication

Leading field journal. A leading journal in economics or a neighbouring field (on the Tinbergen Institute’s A list or near the top of the RePEc ranking), or a top-rated computer-science venue.

Placed by: Tinbergen Institute A list. How sources are ranked.

Published: 2025 (18 months ago)
Citations: 13 (OpenAlex)

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13 citations — 64th percentile among the 33 indexed papers from 2025 in this collection. Citation counts favor older papers; this compares only same-year papers here, not the whole literature.

□ added to this collection in 2026.

Reshoring, automation, and labor markets under trade uncertainty

Abstract

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