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Tariff: The Most Beautiful Word in the Dictionary?

Author

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  • Edward J. Balistreri
  • Suraiya Binte Ali
  • Christine McDaniel

Abstract

We consider the welfare impacts of US tariff policy at levels proposed by President Donald J. Trump. General‐equilibrium simulations under a widely used transparent one‐sector trade model reveal sizable US welfare losses. When we extend the model to include bilateral firm selection and high resolution input–output linkages, the US losses escalate. We adopt a theory‐with‐numbers method to perform comparative static simulations over President Trump's stated tariff goals and consider retaliatory responses. Unified symmetric global retaliation to US protection, at the level of Trump's proposal, places 270% of the global efficiency loss on the US, leading to gains for all other regions except Canada. Our new results are dependent on both our incorporation of data (beyond trade flows and trade elasticities) and our structural extensions to consider bilateral selection of firms. We provide a foundation for our results in a computational analysis of optimal tariffs.

Suggested Citation

  • Edward J. Balistreri & Suraiya Binte Ali & Christine McDaniel, 2026. "Tariff: The Most Beautiful Word in the Dictionary?," Review of International Economics, Wiley Blackwell, vol. 34(3), pages 672-696, August.
    • Handle: RePEc:bla:reviec:v:34:y:2026:i:3:p:672-696
    DOI: 10.1111/roie.70043
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