ON THE DISTRIBUTIONAL EFFECTS OF INTERNATIONAL TARIFFS

Daniel Carroll and Sewon Hur

International Economic Review, 2023, vol. 64, issue 4, 1311-1346

Abstract: We provide a quantitative analysis of the distributional effects of the 2018 increase in tariffs by the United States and its major trading partners. We build a trade model with incomplete asset markets and households that are heterogeneous in their age, income, wealth, and labor skill. When tariff revenues are used to reduce distortionary taxes on consumption, labor, and capital income, the average welfare loss from the trade war is equivalent to a permanent 0.1% reduction in consumption. Much larger welfare losses are concentrated among retirees and low‐wealth households, whereas only wealthy households experience a welfare gain.

Date: 2023
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https://doi.org/10.1111/iere.12648

Related works:
Working Paper: On the Distributional Effects of International Tariffs (2023)
Working Paper: On the Distributional Effects of International Tariffs (2023)
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