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The Macroeconomic Consequences of Import Tariffs and Trade Policy Uncertainty

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  • Lukas Boer
  • Malte Rieth

Abstract

We estimate the macroeconomic effects of import tariffs and trade policy uncertainty in the United States, combining theory-consistent and narrative sign restrictions in Bayesian SVARs. We find mostly adverse consequences of protectionism, in aggregate and across sectors and regions. Tariff shocks are more important than trade policy uncertainty shocks. Tariff shocks depress trade, investment, and output persistently. The general equilibrium import elasticity is –0.8. Historically, NAFTA/WTO raised output by 1-3% for twenty years. Undoing the 2018/19 measures would raise output by 4% over three years. The findings imply higher gains of trade than partial equilibrium or static trade models.

Suggested Citation

  • Lukas Boer & Malte Rieth, 2024. "The Macroeconomic Consequences of Import Tariffs and Trade Policy Uncertainty," IMF Working Papers 2024/013, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2024/013
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    Cited by:

    1. James Harold, 2024. "Der Zolltarif als Trumpfkarte," Wirtschaftsdienst, Sciendo, vol. 104(12), pages 827-832.
    2. Bonk, Alica Ida & Larkou, Chloe, 2025. "The macroeconomic impact of trade policy: a new identification approach," Working Paper Series 3102, European Central Bank.

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    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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