Tariff confusion

Kalina Manova, Dennis Novy, Thomas Sampson and Aaron Tang

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: US trade policy in 2025 was unprecedented in the frequency, complexity and volatility of tariff announcements. This paper presents evidence that the resulting policy environment reduced trade flows because of confusion over current tariff levels. We build a new US Tariff Announcement Database for 2025 from US presidential executive orders and proclamations. For each origin country, product and month, we calculate US statutory tariffs and propose novel indicators of tariff confusion: the number of relevant announcements, the number of possible tariff calculations arising, and bounds on possible tariff miscalculation. We show that both tariff increases and tariff confusion reduced US imports during 2025, with confusion more than doubling the impact of tariffs. Moreover, tariff confusion was (i) persistent, and more damaging at higher tariff levels; (ii) mediated through lower import quantities, with little effect on import prices; and (iii) less detrimental for relationship-specific goods and origin countries with stronger trust in foreigners. Our results highlight previously unexplored consequences of the manner in which trade policy changes are implemented.

Keywords: confusion; tariffs; trade policy uncertainty; trade war (search for similar items in EconPapers)
Date: 2026-06-30
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Persistent link: https://EconPapers.repec.org/RePEc:cep:cepdps:dp2195

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