The Effect of Tariffs in Global Value Chains

By Johannes Eugster, Florence Jaumotte, Margaux MacDonald, Roberto Piazza

February 25, 2022

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Format: Chicago

Johannes Eugster, Florence Jaumotte, Margaux MacDonald, and Roberto Piazza. The Effect of Tariffs in Global Value Chains, (USA: International Monetary Fund, 2022) accessed December 4, 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

This paper empirically investigates the impact of tariffs when production is organized in global value chains. Using global input-output matrices, we construct four different tariff measures that capture the direct and indirect exposure to tariffs at different stages of the production chain for a broad set of countries and industries. Our results suggest that tariffs have significant effects on economic outcomes, including on countries and sectors not directly targeted. We find that tariffs higher up and further down in the value chain depress value added, employment, labor productivity and total factor productivity to varying degrees. We find no benefits for the sector that enjoys additional protection, yet there is some evidence of economic activity being diverted, i.e. positive effects on value added and employment from tariffs imposed on competitors. Our paper relates to recent innovations in theoretical gravity models and provides an empirical assessment of possible long-term effects of recent trade tensions.

Subject: Exports, Imports, International trade, Labor productivity, Production, Tariffs, Taxes, Total factor productivity

Keywords: Effect of tariff, Employment from tariff, Exports, Global, Global value chains, IMF working paper research Department, Imports, Labor productivity, Productivity, Tariff measure, Tariff war, Tariffs, Tariffs, Total factor productivity, Upstream tariff, Value added

Publication Details

Pages:

33
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2022/040
Stock No:

WPIEA2022040
ISBN:

9798400201158
ISSN:

1018-5941

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