The Macroeconomic Consequences of Import Tariffs and Trade Policy Uncertainty

Lukas Boer and Malte Rieth

No 2072, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: We estimate the macroeconomic effects of import tariffs and trade policy uncertainty in the United States, combining theory-consistent and narrative sign restrictions on Bayesian SVARs. We find mostly adverse consequences of protectionism. Tariff shocks are more important than trade policy uncertainty shocks. Tariff shocks depress trade, investment, and output persistently, in aggregate and across sectors and space. 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 cumulatively 4%. The findings imply higher output costs of protectionism than partial equilibrium or static trade models.

Keywords: Trade policy; international trade; structural vector autoregressions; narrative identification; general equilibrium; United States (search for similar items in EconPapers)
JEL-codes: C32 E30 F13 F14 (search for similar items in EconPapers)
Pages: 72 p.
Date: 2024
New Economics Papers: this item is included in nep-int
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Citations: View citations in EconPapers (1)

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Working Paper: The Macroeconomic Consequences of Import Tariffs and Trade Policy Uncertainty (2024)
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