Author(s)

Jianing Zhang

Corresponding Author

Jianing Zhang

Abstract

This study employs mathematical modeling to evaluate the short-term and long-term economic impacts of U.S. semiconductor reshoring policies, focusing on supply chain dynamics, labor market effects, and strategic benefits. Short-term analyses utilize an Input-Output Model and Cost-Benefit Analysis (CBA) to quantify initial disruptions, including elevated production costs due to supply chain restructuring and capital expenditures, as well as net negative returns. Long-term projections integrate a Computable General Equilibrium (CGE) model and an Endogenous Growth Model (EGM), revealing potential gains in GDP growth and total factor productivity (TFP) (0.8% annually) after a 7–10-year adjustment period, contingent on sustained subsidies and human capital development. Labor market simulations indicate a net creation of 120,000 high-tech jobs but temporary losses in other manufacturing sectors, with wage premiums rising by 25%. Strategic trade modeling estimates geopolitical risk-reduction benefits at $1.2 trillion in present value, albeit with a 0.9% cumulative GDP loss in the first five years. The findings underscore the trade-off between short-term economic strain and long-term national security and innovation gains, emphasizing the need for policy continuity in subsidies, workforce training, and regional cluster development to achieve resilience and technological leadership. This multi-model framework provides actionable insights for optimizing industrial policy amid global supply chain fragmentation.

Keywords

Semiconductor Reshoring, Economic Impact, Supply Chain Resilience, Geopolitical Risk