IMF Working Papers

The Macroeconomic Consequences of Import Tariffs and Trade Policy Uncertainty

By Lukas Boer, Malte Rieth

January 19, 2024

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Lukas Boer, and Malte Rieth. The Macroeconomic Consequences of Import Tariffs and Trade Policy Uncertainty, (USA: International Monetary Fund, 2024) accessed December 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

We estimate the macroeconomic effects of import tariffs and trade policy uncertainty in the United States, combining theory-consistent and narrative sign restrictions in Bayesian SVARs. We find mostly adverse consequences of protectionism, in aggregate and across sectors and regions. Tariff shocks are more important than trade policy uncertainty shocks. Tariff shocks depress trade, investment, and output persistently. The general equilibrium import elasticity is –0.8. Historically, NAFTA/WTO raised output by 1-3% for twenty years. Undoing the 2018/19 measures would raise output by 4% over three years. The findings imply higher gains of trade than partial equilibrium or static trade models.

Subject: Exports, Imports, International trade, Tariffs, Taxes, Trade balance, Trade policy

Keywords: Equilibrium import elasticity, Exports, General equilibrium, Global, Import tariff, Imports, International trade, Narrative identification, North America, Structural vector autoregressions, Tariff shock, Tariffs, Trade balance, Trade policy, Trade policy uncertainty shock, Uncertainty shock, United States.

Publication Details

  • Pages:

    76

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2024/013

  • Stock No:

    WPIEA2024013

  • ISBN:

    9798400265143

  • ISSN:

    1018-5941

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