Tariffs and Firm Expectations

Klaus Abberger, Arbërim Bibaj, Hans Gersbach, Alexis Perakis, Alexander Rathke, Samad Sarferaz and Kieran Walsh

No 12510, CESifo Working Paper Series from CESifo

Abstract: We study how firms’ expectations respond to prospective tariff shocks using a randomized survey experiment among Swiss manufacturing firms. When confronted with potential U.S. tariffs, respondents expect sizable declines in turnover and investment, yet anticipate increases in ex-tariff export prices despite falling demand. This combination of declining activity and rising prices runs counter to the standard prediction of trade models, in which tariffs reduce foreign demand and put downward pressure on exporters’ prices. The observed pattern is consistent with a destination-specific cost-push mechanism, whereby tariffs raise exporters’ marginal costs through compliance burdens, logistical frictions, or reduced scale. Embedding firms’ stated price and sales expectations in a parsimonious structural pricing model, we quantify the implied cost changes and recover sector-level demand elasticities. The estimates indicate substantial heterogeneity across industries and are, on average, consistent with short-run trade elasticities from the recent literature. Moreover, we corroborate the experimental evidence using panel survey data on firms’ expectations around an unexpected U.S. tariff announcement.

Keywords: international trade; tariffs; firm expectations; pricing; cost pass-through (search for similar items in EconPapers)
JEL-codes: D22 D84 E31 F13 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_12510

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