IDEAS home Printed from https://ideas.repec.org/a/spr/futbus/v11y2025i1d10.1186_s43093-025-00507-9.html
   My bibliography  Save this article

Modeling the dynamic effects of tariffs on economic variables and trade policies

Author

Listed:
  • Hemendra Pal

    (Royal Holloway University of London
    Texas A & M University)

Abstract

Tariffs, a key instrument of trade policy, are often viewed as tools to correct trade imbalances or protect domestic industries. However, their effects on an economy extend beyond immediate price changes, triggering complex feedback loops that unfold over time. This study explores tariffs as a feedback control mechanism within an economic system, emphasizing their role in influencing key variables such as inflation, trade balances, consumption, and monetary policy. By modeling these interactions using delayed differential equations (DDEs), the research demonstrates how time lags in economic adjustments — such as the delayed effects of tariffs on inflation and trade volume can amplify or attenuate the initial impact of policy changes. The feedback loop suggests that tariffs, while raising prices and reducing trade volume in the short term, also lead to inflationary pressures, which may prompt central bank responses, such as interest rate adjustments. These adjustments, in turn, affect investment and consumption, further influencing the economy. The research provides both a theoretical and practical framework for understanding the dynamic and delayed nature of tariffinduced economic changes, with insights into how policymakers can better anticipate and manage the consequences of trade policies. This model offers a comprehensive understanding of the broader economic adjustments and the role of time lags in shaping the long-term impact of tariffs on global trade and national economies.

Suggested Citation

  • Hemendra Pal, 2025. "Modeling the dynamic effects of tariffs on economic variables and trade policies," Future Business Journal, Springer, vol. 11(1), pages 1-14, December.
  • Handle: RePEc:spr:futbus:v:11:y:2025:i:1:d:10.1186_s43093-025-00507-9
    DOI: 10.1186/s43093-025-00507-9
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1186/s43093-025-00507-9
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.

    File URL: https://libkey.io/10.1186/s43093-025-00507-9?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:futbus:v:11:y:2025:i:1:d:10.1186_s43093-025-00507-9. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.