“Nobody Knows the Impact of the Tariffs” – Bullshit

​Several economic studies conducted by distinguished economists and prestigious institutions have analyzed the impact of tariffs on the economy, consistently finding that tariffs tend to have negative effects. Here is a list of 10 notable studies that ChatGPT pulled for me in 3 seconds:

1. “Are Tariffs Bad for Growth? Yes, Say Five Decades of Data from 150 Countries”: Authored by Davide Furceri, Swarnali A. Hannan, Jonathan D. Ostry, and Andrew K. Rose, this study analyzed data from 151 countries over the period 1963–2014. The researchers found that increases in import tariffs are associated with significant and persistent declines in output growth. Specifically, a one standard deviation increase in the tariff rate (approximately 3.6 percentage points) leads to about a 0.4% decline in output five years later. The study attributes this decline to reduced labor efficiency, real exchange rate appreciation, and higher production costs due to increased prices of imported inputs. ​

2. “Macroeconomic Consequences of Tariffs”: In this working paper, Davide Furceri, Swarnali A. Hannan, Jonathan D. Ostry, and Andrew K. Rose expanded on their previous research to explore the broader macroeconomic effects of tariffs. They found that higher tariffs lead to declines in output, productivity, and employment, as well as increases in inequality. The study underscores that the negative effects of tariffs are both economically and statistically significant. ​

3. “International Trade, Distortions and Long-Run Economic Growth”: Jong-Wha Lee examined how trade distortions, such as tariffs, impact long-term economic growth. The study concluded that tariffs and exchange controls generate cross-country divergences in growth rates and per capita income over extended periods, highlighting the detrimental effects of trade barriers on economic development. ​IMF

4. “The Effects of Tariffs and Trade Barriers in CBO’s Projections”: The Congressional Budget Office analyzed the impact of tariffs implemented since January 2018, finding that these trade barriers reduced the level of real U.S. GDP by roughly 0.3 percent by 2020. The study highlighted that tariffs raise domestic prices, thereby reducing consumers’ purchasing power and increasing business investment costs. ​Congressional Budget Office

5. “The Macroeconomic Consequences of Import Tariffs and Trade Policy Uncertainty”: Lukas Boer and Malte Rieth estimated the macroeconomic effects of import tariffs and trade policy uncertainty in the United States. Their findings indicate that tariff shocks depress trade, investment, and output persistently, suggesting that protectionist measures have adverse economic consequences. ​IMF

6. “Tariffs Do More Harm Than Good at Home”: Maurice Obstfeld discussed how tariffs, while intended to protect domestic industries, can be broadly contractionary, reducing output, investment, and employment in the economy. The study emphasized that such negative effects occur even if trade partners do not retaliate with tariffs of their own. ​IMF

7. “Macroeconomic Consequences of Tariffs”: The Cato Institute reviewed empirical studies and found that tariff increases lead to declines in output and productivity in the medium term, as well as increases in unemployment and inequality. The study highlighted that tariffs do not improve the trade balance and often result in real exchange rate appreciation. ​IMF eLibrary+2Cato Institute+2IMF+2

8. “The Return to Protectionism”: Economists Pablo D. Fajgelbaum, Pinelopi K. Goldberg, Patrick J. Kennedy, and Amit K. Khandelwal examined the effects of the 2018 trade war on the U.S. economy. Their analysis revealed that the tariffs led to higher import prices, resulting in increased costs for consumers and businesses. The study concluded that the tariffs imposed during this period caused substantial welfare losses for the U.S. economy.​

9. “The Impact of the 2018 Trade War on U.S. Prices and Welfare”: Researchers Mary Amiti, Stephen J. Redding, and David E. Weinstein analyzed the price effects of the 2018 tariffs. They found that the full incidence of the tariffs was passed on to U.S. importers and consumers, leading to higher prices and reduced welfare. The study emphasizes that the tariffs did not lead to a reduction in foreign export prices, meaning U.S. entities bore the entire cost.​

10. “Macroeconomic Consequences of Tariffs”: In this working paper, Davide Furceri, Swarnali A. Hannan, Jonathan D. Ostry, and Andrew K. Rose expanded on their previous research to explore the broader macroeconomic effects of tariffs. They found that higher tariffs lead to declines in output, productivity, and employment, as well as increases in inequality. The study underscores that the negative effects of tariffs are both economically and statistically significant.​

These studies collectively provide robust evidence that tariffs tend to have adverse effects on economic growth, productivity, employment, and consumer welfare.