Effects of tariffs through the lens of empirical research

In recent years, policymakers across the political spectrum have proposed, and enacted sweeping new import taxes on foreign goods, often with the stated goals of reviving domestic manufacturing, protecting workers, and strengthening economic resilience. Supporters argue that tariffs can rebuild industrial capacity and shield domestic producers from unfair foreign competition. Critics counter that tariffs raise prices, distort production, invite retaliation, and ultimately leave economies poorer and less productive.

Much of this debate, however, proceeds at a highly rhetorical level. Politicians and commentators often speak in broad generalities about “bringing jobs back” or “protecting American industry,” while critics frequently respond with equally broad appeals to textbook economics. What is often missing is a careful examination of the large and growing empirical literature on the actual observed effects of tariffs.

Over the last three decades, economists have produced a substantial body of quantitative research examining how tariffs affect prices, trade flows, manufacturing employment, productivity, and economic output. This literature spans dozens of countries and trade episodes, including the Canada–U.S. Free Trade Agreement, NAFTA, trade liberalization in Latin America and Asia, antidumping duties, and the U.S.–China trade war (2018-2026). The methods used in these studies range from firm-level panel data and difference-in-differences designs to regional labor-market analysis and structural trade estimation.

This essay synthesizes much of that empirical literature. Rather than focusing on theory or ideological arguments, I compiled quantitative studies (published since 1997) that estimate statistically significant effects of tariffs or tariff liberalization on key economic outcomes. The goal is not to conduct a formal meta-analysis, but rather to systematically review the direction and consistency of the evidence across different variables and contexts.

To keep the exercise manageable, I focus primarily on four categories of outcomes: consumer prices, manufacturing employment, trade volumes, and productivity/output. I largely exclude purely theoretical papers, narrative essays, and studies without identifiable quantitative estimates. The result is a dataset composed primarily of empirical papers using measurable tariff changes and econometric identification strategies.

Several important caveats are worth emphasizing at the outset. First, some studies examine broad trade liberalization episodes, while others study narrow sector-specific tariffs or antidumping duties. Some focus on protected upstream industries, while others examine downstream manufacturers exposed to higher input costs. Second, the finding in some studies that tariffs preserve employment in a protected sector does not necessarily imply positive economy-wide effects. Many studies distinguish between localized gains and broader aggregate costs.

Still, despite these differences, broad patterns emerge from the literature. The bar charts below summarize the direction of statistically significant findings across 56 studies. While counting studies is not the same thing as measuring the precise magnitude of effects, the evidence nevertheless provides a useful overview of where the empirical literature has converged, and where important disagreements remain.

The purpose of the figure above is not to estimate a single “average” tariff effect. The studies included here examine different countries, time periods, tariff regimes, margins of adjustment, and outcome variables. Some estimate the effect of tariff reductions during broad liberalization episodes, such as NAFTA, CUSFTA, or India’s 1990s reforms. Others examine tariff increases, antidumping duties, retaliatory tariffs, or recent U.S. trade-war episodes. Some use firm- or plant-level data, while others rely on regional labor markets, product-level trade flows, or macroeconomic panels.

For that reason, this analysis should be read as a synthesis of the direction of statistically significant findings, not as a formal meta-analysis. A study is counted as finding a positive effect when higher tariffs are associated with an increase in the relevant variable: prices, manufacturing employment, trade volume, or output/productivity. A negative effect means higher tariffs are associated with a decline in that variable. This distinction is especially important because a “positive” tariff effect is not necessarily economically desirable. A positive effect on consumer prices, for example, means tariffs raise prices. A positive effect on employment means tariffs preserve or increase employment in the relevant sector.

The most unambiguous result is that tariffs raise prices. In the studies reviewed here, 19 find statistically significant positive effects of tariffs on prices, while none find significant negative effects. This includes evidence from antidumping duties, broad tariff increases, washing-machine tariffs, the 2018–19 U.S.–China trade war, and more recent tariff episodes. The price measures vary across studies, import prices, factory-gate prices, retail prices, CPI, and PCE goods prices, but the direction of the finding is strikingly consistent.

The magnitudes are often large as well. Blonigen and Haynes find that U.S. antidumping duties on Canadian iron and steel were passed through to import prices at more than the full statutory rate. Amiti and coauthors find that the Trump tariffs were largely borne by U.S. consumers and firms, with a 10 percent tariff increase associated with roughly a 10.4 percent increase in domestic prices. Flaaen, Hortaçsu, and Tintelnot find that washer tariffs raised washer prices by nearly 12 percent and even raised dryer prices, despite dryers not being directly tariffed. Cavallo, Gopinath, Neiman, and Tang similarly find high pass-through at the border, with more muted but still positive effects at retail. The basic lesson is straightforward: whatever their intended purpose, tariffs operate first as taxes on imports, and the empirical literature consistently finds that those taxes show up in prices.

The second clear result is that tariffs reduce trade volumes. Here, 12 studies find negative effects of tariffs on trade, while only one finds a positive effect. The negative findings appear both in studies of liberalization and protection. Clausing finds that Canadian goods receiving larger tariff reductions under CUSFTA saw much faster import growth into the United States. Romalis and Caliendo and Parro similarly find that NAFTA increased trade flows among member countries. On the protection side, Prusa finds that antidumping duties sharply reduced targeted imports, while studies of the recent U.S.–China trade war find substantial declines in targeted imports and exports.

The one positive finding in this category is not really evidence that tariffs increase trade in the ordinary sense. Rather, Fajgelbaum, Goldberg, Kennedy, Khandelwal, and Taglioni find that tariffs created export opportunities for third-party “bystander” countries. This is best understood as trade diversion. Tariffs suppress trade between the countries directly involved in the dispute, but some of that lost trade is rerouted through other countries or replaced by alternative suppliers. Thus, the overall trade-volume evidence is not that tariffs create more trade, but that they redirect and reduce targeted trade flows.

The employment evidence is more complicated and politically important. Among 12 relevant studies, 4 studies find positive effects of tariffs on manufacturing employment, while 8 find negative effects. Tariffs can preserve employment in protected industries. Revenga finds that tariff reductions in Mexican manufacturing were associated with employment declines in protected sectors. Trefler finds that the deepest Canadian tariff cuts under the Canada–U.S. Free Trade Agreement reduced employment by about 12 percent in the most affected industries. Dix-Carneiro and Kovak find that Brazilian regions exposed to larger tariff reductions suffered prolonged declines in formal employment and earnings. These studies imply that protection can maintain jobs in the industries or regions receiving it.

But this is only one side of the employment story. A larger set of studies finds that tariffs reduce employment once broader channels are considered. Flaaen and Pierce are especially important here because they explicitly separate the protection effect from the input-cost effect. They find that tariffs provided some benefit to protected industries, but this was more than offset by higher input costs and retaliation, producing a net decline in manufacturing employment. Waugh finds that goods-producing employment grew more slowly in counties more exposed to retaliatory tariffs. Aghion, Bergeaud, Lequien, and Melitz find that tariff exposure reduced firm employment growth and weakened firm dynamism. Bown, Conconi, Erbahar, and Trimarchi find that antidumping protection against China reduced downstream employment, wages, sales, and investment, with no significant protected-sector employment gains. Javorcik and coauthors similarly find that input-tariff and retaliatory-tariff exposure reduced online job postings.

The best reading of the employment literature, then, is not that tariffs simply “create jobs” or “destroy jobs.” Rather, tariffs redistribute employment. They may preserve jobs in directly protected firms or industries, but they also raise costs for downstream producers, invite retaliation against exporters, and reduce activity in industries that rely on imported inputs. When studies focus narrowly on protected sectors, the employment effect is more likely to appear positive. When studies account for supply chains, downstream users, retaliation, or broader regional exposure, the effect is more often negative. For instance, tariffs designed to protect the jobs of steel workers may offer some protective effect for those workers, but for every steel worker there are 80 workers in industries that use steel as an input good, and these workers would likely suffer losses due to higher input costs.

Finally, the output, productivity, and welfare literature is overwhelmingly unfavorable to tariffs. In the studies reviewed here, 25 find negative effects of tariffs on output, productivity, or welfare, while none find positive effects. This is perhaps the strongest result after prices. Across countries including Chile, India, Indonesia, Hungary, Brazil, Canada, China, and the United States, the same pattern appears: lower tariffs tend to raise productivity, while higher tariffs tend to reduce productivity or economic welfare.

The mechanism varies by context. Pavcnik finds that Chilean trade liberalization increased productivity in import-competing sectors. Amiti and Konings find that input-tariff reductions in Indonesia generated large productivity gains, especially for firms importing intermediate goods. Topalova and Khandelwal find that both output- and input-tariff reductions raised productivity among Indian firms, with input tariffs having especially large effects. Halpern, Koren, and Szeidl find similar productivity gains from access to cheaper foreign inputs in Hungary. Other studies show that tariff reductions increase product scope, induce technology adoption, improve resource allocation, or allow more productive firms to expand. The recent protectionist episodes tell a similar story from the opposite direction: higher tariffs raise costs, reduce real income, and lower welfare.

Taken together, the empirical literature tells a consistent but nuanced story. Tariffs reliably raise prices and reduce targeted trade flows. Their employment effects are more ambiguous because they depend heavily on the level of analysis: protected industries may gain, but downstream firms, exporters, and consumers often lose. The productivity and output evidence, however, points strongly in one direction. Tariffs shelter some firms from competition and may preserve some jobs in the short run, but they do so at the cost of higher prices, reduced trade, weaker productivity growth, and lower overall economic welfare.