IDEAS home Printed from https://ideas.repec.org/p/fda/fdaddt/2025-09.html

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

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: https://documentos.fedea.net/pubs/dt/2025/dt2025-09.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Dani Rodrik, 2000. "How Far Will International Economic Integration Go?," Journal of Economic Perspectives, American Economic Association, vol. 14(1), pages 177-186, Winter.
    2. Shoven, John B & Whalley, John, 1984. "Applied General-Equilibrium Models of Taxation and International Trade: An Introduction and Survey," Journal of Economic Literature, American Economic Association, vol. 22(3), pages 1007-1051, September.
    3. Miranda-Pinto, Jorge & Silva, Alvaro & Young, Eric R., 2023. "Business cycle asymmetry and input-output structure: The role of firm-to-firm networks," Journal of Monetary Economics, Elsevier, vol. 137(C), pages 1-20.
    4. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Baldassarre,Alessio & Calà,Valerio Ferdinando & Carullo,Danilo & Dudu,Hasan & Fusco,Elisa Marie & Giacobbe,Pasquale & Orecchia,Carlo, 2023. "Simulating the Effect of Business Tax Abolition through a New Regional CGE Model : Evidencefrom Italy," Policy Research Working Paper Series 10387, The World Bank.
    2. Martin, Will, 2021. "Tools for measuring the full impacts of agricultural interventions," IFPRI-MCC technical papers 2, International Food Policy Research Institute (IFPRI).
    3. Mutambatsere, Emelly, 2006. "Trade Policy Reforms in the Cereals Sector of the SADC Region: Implications on Food Security," Working Papers 127055, Cornell University, Department of Applied Economics and Management.
    4. Li Xin, 2014. "A General Equilibrium Analysis of the TPP Free Trade Agreement With and Without China," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 8(2), pages 115-136, May.
    5. Johannes Ziesmer, 2024. "Identifying key sectors of sustainable development: A Bayesian framework estimating policy‐impacts in a general equilibrium," Agribusiness, John Wiley & Sons, Ltd., vol. 40(2), pages 458-483, April.
    6. Ahmed, Vaqar & O' Donoghue, Cathal, 2007. "CGE-Microsimulation Modelling: A Survey," MPRA Paper 9307, University Library of Munich, Germany.
    7. Bussolo, Maurizio & Mensbrugghe, Dominique van der & Lay, Jann, 2005. "Trade options for Latin America. A Poverty Assessment Using Macro-Micro Linkages," Conference papers 331405, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    8. Fan Zhai, 2008. "Armington Meets Melitz: Introducing Firm Heterogeneity in a Global CGE Model of Trade," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 23, pages 575-604.
    9. Lee, Hiro & Roland-Holst, David W., 1998. "Prelude to the pacific century: Overview of the region, leading issues, and methodology," MPRA Paper 82339, University Library of Munich, Germany.
    10. Kym Anderson, 2016. "Agricultural Trade, Policy Reforms, and Global Food Security," Palgrave Studies in Agricultural Economics and Food Policy, Palgrave Macmillan, number 978-1-137-46925-0, June.
    11. Lewis, Jeffrey D. & Robinson, Sherman & Thierfelder, Karen, 2001. "Free Trade Agreements And The Sadc Economies," TMD Discussion Papers 16275, CGIAR, International Food Policy Research Institute (IFPRI).
    12. Jeffrey D. Lewis & Sherman Robinson & Karen Thierfelder, 2003. "Free Trade Agreements and the SADC Economies," Journal of African Economies, Centre for the Study of African Economies, vol. 12(2), pages 156-206, June.
    13. Karplus, Valerie J. & Paltsev, Sergey & Babiker, Mustafa & Reilly, John M., 2013. "Applying engineering and fleet detail to represent passenger vehicle transport in a computable general equilibrium model," Economic Modelling, Elsevier, vol. 30(C), pages 295-305.
    14. Kerkelä , Leena, 2007. "Agricultural trade liberalization –steps taken by the EU and how Finland will face them," Conference papers 331667, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    15. Roland-Holst, David & Mensbrugghe, Dominique van der & Tarp, Finn & Rand, John & Barslund, Mikkel, 2002. "Prototype Specification for a Real Computable General Equilibrium Model," MPRA Paper 29788, University Library of Munich, Germany.
    16. Mojtaba Bahmani & Nejati Mehdi, 2015. "Trade-based Technology Transfer and Its Impact on the Iranian Economy: Using a CGE Model," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 19(1), pages 107-122, Winter.
    17. Naohiko Yahaba, 2010. "How does a decrease in oil production affect the world's economy?," Energy Working Papers 22722, East Asian Bureau of Economic Research.
    18. Padella, Monica & Finco, Adele & Tyner, Wallace E., 2011. "Analysis of the Impacts of EU Biofuels Programs using a GTAP model," Conference papers 332124, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    19. Nabil Annabi & John Cockburn & Bernard Decaluwé, 2006. "Functional Forms and Parametrization of CGE Models," Working Papers MPIA 2006-04, PEP-MPIA.
    20. McKibbin, Warwick J. & Wilcoxen, Peter J., 1998. "The theoretical and empirical structure of the G-Cubed model," Economic Modelling, Elsevier, vol. 16(1), pages 123-148, January.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    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:fda:fdaddt:2025-09. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: Marta Fernández (email available below). General contact details of provider: https://www.fedea.net .

    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.