The Macroeconomic Consequences of Import Tariffs and Trade Policy Uncertainty

Lukas Boer and Malte Rieth

No 2024/013, IMF Working Papers from International Monetary Fund

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.

Keywords: Trade policy; international trade; structural vector autoregressions; narrative identification; general equilibrium; United States.; equilibrium import elasticity; trade policy uncertainty shock; import tariff; tariff shock; uncertainty shock; Tariffs; Imports; Trade balance; Exports; North America; Global (search for similar items in EconPapers)
Pages: 76
Date: 2024-01-19
New Economics Papers: this item is included in nep-int
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Working Paper: The Macroeconomic Consequences of Import Tariffs and Trade Policy Uncertainty (2024)
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