The Macroeconomic Effects of Tariffs: Insights from 180 Years of U.S. Trade Policy

Tamar den Besten, Regis Barnichon, Känzig, Diego and Aayush Singh

No 21381, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We study the macroeconomic effects of tariff policy using U.S. historical data from 1840–2024. We construct a narrative series of plausibly exogenous tariff changes – based on major legislative actions, multilateral negotiations, and temporary surcharges – and use it as an instrument to identify a structural tariff shock. Tariff increases are contractionary: imports fall sharply, exports decline with a lag, and output and manufacturing activity drop persistently. The shock transmits through both supply and demand channels. Prices rise in the full sample but fall post-World War II, a pattern consistent with changes in the monetary policy response and with stronger international retaliation and reciprocity in the modern trade regime.

Keywords: Trade; policy (search for similar items in EconPapers)
JEL-codes: E30 F13 F14 F41 H20 (search for similar items in EconPapers)
Date: 2026-04
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