Do Import Tariffs Protect U.S. Firms?

Mary Amiti, Matthieu Gomez (), Sang Hoon Kong and David E. Weinstein
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Matthieu Gomez: https://econ.columbia.edu/econpeople/matthieu-gomez/

No 20241205, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: One key motivation for imposing tariffs on imported goods is to protect U.S. firms from foreign competition. By taxing imports, domestic prices become relatively cheaper, and Americans switch expenditure from foreign goods to domestic goods, thereby expanding the domestic industry. In a recent Liberty Street Economics post, we highlighted that our recent study found large aggregate losses to the U.S. from the U.S.-China trade war. Here, we delve into the cross-sectional patterns in search of segments of the economy that may have benefited from import protection. What we find, instead, is that most firms suffered large valuation losses on tariff-announcement days. We also document that these financial losses translated into future reductions in profits, employment, sales, and labor productivity.

Keywords: trade war; Import tariff; stock returns (search for similar items in EconPapers)
JEL-codes: F13 F14 (search for similar items in EconPapers)
Date: 2024-12-05
New Economics Papers: this item is included in nep-int
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