Tariff Troubles: Repercussions of Protectionist Policies on US Agriculture and the Trade Deficit

Tatjana Döbeling, Sionegael Ikeme and Amanda M. Countryman

The World Economy, 2025, vol. 48, issue 10, 2261-2289

Abstract: The United States has increased protectionist measures since 2018 and has remained notably passive while other nations have pursued trade agreements. This change, coupled with the potential for future increased import tariffs, suggests impending changes in trade dynamics between the United States and the rest of the world. This study employs a recursive dynamic computable general equilibrium model to examine the economy‐wide and sector‐specific effects of potential future US protectionist measures, with an emphasis on agricultural sectors. We simulate the impact of US exclusion from new trade agreements and the effects of implementing a 10% import tariff on all goods and final consumption goods only, with and without retaliation from other countries. Findings reveal that import tariffs do not reduce the trade deficit because of the negative impacts on US exports, even if there is no retaliation from trade partners. Agricultural sectors are generally adversely affected, although findings show differentiated sectoral impacts that vary across policies.

Date: 2025
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