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The short-run impact of US tariffs on an interconnected world

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  • Jorge Alonso-Ortiz
  • José María Da-Rocha

Abstract

We quantify the short-run impact of U.S. tariffs with a 77-country, 11-sector input-output model calibrated to OECD´s ICIOs. All intermediate inputs are locked in fixed Leontief proportions, so relative prices-not quantities-absorb the shock. A uniform 10% duty trims world GDP by 0.73% and U.S. GDP by 0.83%; ratcheting the schedule to 25% on NAFTA, to 15% on EU partners, and to 145% on China deepens those losses to 3.38% and 3.78%, respectively. Global trade flows in value, measured as exports plus imports over GDP, drop by 4.60% on average, but the U.S. is the biggest loser as its trade flows drop by -2.40% with a uniform duty, but drops can be as large as -11.60%.

Suggested Citation

  • Jorge Alonso-Ortiz & José María Da-Rocha, 2025. "The short-run impact of US tariffs on an interconnected world," Working Papers 2025-09, FEDEA.
    • Handle: RePEc:fda:fdaddt:2025-09
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