Tariffs - What Do They Achieve?
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Tariffs - What Do They Achieve?
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We discuss the effects of tariffs on consumers and producers, drawing on evidence from the tariff war during the first Trump administration.
The empirical evidence shows that import tariffs led to increases in domestic prices, reductions in import quantities and a reduction in product variety. This coupled with additional adverse effects on global supply chains and retaliatory tariffs makes it hard to understand how the U.S. can gain in economic terms from tariffs.
We draw our insights from this academic paper:
Amiti, Weinstein, Redding: "The Impact of the 2018 Tariffs on Prices and Welfare"
https://www.aeaweb.org/articles?id=10.1257/jep.33.4.187
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