title: The Macroeconomic Effects of Tariffs
author: Tyler Cowen
contenttype: article
publication: Marginal REVOLUTION
published: 2026-02-25T00:30:16+00:00
sourceurl: https://marginalrevolution.com/marginalrevolution/2026/02/the-macroeconomic-effects-of-tariffs.html?utmsource=rss&utmmedium=rss&utm_campaign=the-macroeconomic-effects-of-tariffs
word_count: 139
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. That is from a new NBER working paper by Tamar den Besten & Diego R. Känzig . The post The Macroeconomic Effects of Tariffs appeared first on Marginal REVOLUTION .