Trump Tariffs and Persistence in Crude Oil Prices: A Long-Memory Approach

Guglielmo Maria Caporale, Luis Alberiko Gil-Alana and Oluwadare O. Ojo

No 12562, CESifo Working Paper Series from CESifo

Abstract: This paper examines the impact on crude oil prices of the trade tariffs announced by the Trump administration on 2 April 2025 (“Liberation Day”). More specifically, it uses fractional integration methods to analyse daily data on WTI, Brent and Murban oil prices spanning the period from 3 June 2024 to 14 January 2026 for the former two and from 8 October 2024 to 15 January 2026 for the latter. Their long-memory and persistence properties are investigated initially over the full sample, and then the effects of the Trump tariff announcement are assessed by means of subsample analysis for the pre- and post-announcement period as well as recursive estimation of the fractional differencing parameter d measuring persistence. The results indicate that the unit root null cannot be rejected in any case, whether one considers the full sample or the subsamples, which implies that shocks have permanent effects. Further, the recursive estimation shows a significant impact of tariffs on the degree of persistence of oil prices only at the time of the announcement, when the wide confidence bands suggest a high degree of uncertainty - in the subsequent period no significant changes can be detected in the stochastic behaviour of the series following the downward shift in their level caused by the announcement.

Keywords: Trump tariffs; crude oil prices; fractional integration; long memory; persistence (search for similar items in EconPapers)
JEL-codes: C22 F10 F13 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_12562

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