25.1 Jorge Alonso, José María Da Rocha"The short-run impact of US tariffs on an interconnected world", FEDEA working paper, No. 9, 2025, pages 1-42. August, 2025.
Abstract:
We quantify the short-run impact of U.S. tariffs with a 77-country, 11-sector input–output model calibrated to OECD’s ICIOs. All intermediate inputs are locked in fixed Leontief proportions, so relative prices—not quantities—absorb the shock.
A uniform 10% duty trims world GDP by 0.73% and U.S. GDP by 0.83%; ratcheting the schedule to 25% on NAFTA, to 15% on EU partners, and to 145% on China deepens those losses to 3.38% and 3.78%, respectively. Global trade flows in value, measured as exports plus imports over GDP, drop by 4.60% on average, but the U.S. is the biggest loser as its trade flows drop by -2.40% with a uniform duty, but drops can be as large as -11.60%.