*Trade war: my theory of the case* 1. What is the goal/ideal outcome/trump admin hopes: 10% tariff across the board with no retaliation + direct non-tariff favors from other countries to settle this at 10% + a possible full-scale bilateral trade war with China. (1/n)

Note they have shifted from complaining about taxes that “discriminate” against US companies to policies that “burden” them. Might seem like a small change but that moves us from complaints about tariffs to ANY economic policy pursued by a sovereign state they don’t like.

In the long run, 104% plus tariffs certainly mean almost no bilateral trade. In the short-run, it means a world of hurt for those firms that rely on a specific component (a part designed for their particular use case) from China -- and of course for Apple ... 2/2

On the views of my Peterson Institute for International Economics colleagues on tariffs, some cliff notes: shorturl.at/2DWTl

What is the effect of heightened uncertainty on international trade? ➡️ Trade reacts more strongly than domestic economic activity. Our research: Trade and Uncertainty | The Review of Economics and Statistics | MIT Press ⁦The Review of Economics and Statistics (REStat)⁩ direct.mit.edu/rest/article/1…

updated #tariff calculation on the site tradewartracker.com

What tariff policy closes a long-run trade deficit? As it turns out, this is an ill-posed question, as we explain in this note. (1/n) dropbox.com/scl/fi/9j4c80x…

What else could be more relevant now? "Global Networks, Monetary Policy and Trade" by Sebnem Kalemli-Ozcan, Can Soylu, and Muhammed A. Yıldırım "We develop a novel framework to study the interaction between monetary policy and trade." "Tariffs act simultaneously as demand and

Tariffs do not bring jobs back and lead to a revival of manufacturing. The link between macro fundamentals and trade deficits is not well understood it seems. Tariffs can act as a consumption tax on demand side and cost push shock on the supply side, leading to lower consumption

Very excited about this new paper. Using LLMs to analyze at scale and in near real time how firms are reacting to tariffs, export controls, and sanctions. We’ll update this frequently. Early draft, but if you want a sneak preview i’ll talk about this at 4:30pm PT today during

Have a look at this! 'Gravity for Undergrads' is a great resource for students and trade novices - introducing the gravity model with practical data and code examples in both Stata & R. Kudos to Yoto V. Yotov for making complex trade concepts accessible. Gravity rules indeed!

Excellent piece by Maury Obstfeld! economist.com/by-invitation/…

IMF Growth Projections: 2025 🇺🇸US: 1.8% 🇩🇪 Germany: 0.0% 🇫🇷France: 0.6% 🇮🇹Italy: 0.4% 🇪🇸Spain: 2.5% 🇬🇧UK: 1.1% 🇯🇵Japan: 0.6% 🇨🇦Canada: 1.4% 🇨🇳China: 4.0% 🇮🇳India: 6.2% 🇷🇺Russia: 1.5% 🇲🇽Mexico: -0.3% 🇸🇦KSA: 3.0% 🇳🇬 Nigeria: 3.0% 🇿🇦RSA: 1.0%

I see some comments taking our paper as advocating for more inflation. This is not at all our point. Our point is that this is an inflationary shock, which is bad, and puts the Fed in an ugly spot. One thing that is sometimes hard to communicate is that the theory of optimal

Interested in international economics and geopolitics? You may want to consider submitting to this conference. I am looking forward to guest editing the corresponding JIE special issue.

1/12 This Liberty Street account of trade makes the same mistakes most mainstream American economists make when it comes to explaining the US trade deficit. libertystreeteconomics.newyorkfed.org/2025/05/why-do…

2/12 Thomas Klitgaard notes, correctly, that by definition the US current account is equal to the excess of US investment over US savings. But then he insists that causality can only run in one direction: from the internal account to the external account.

What is the optimal macroeconomic tariff when trade is imbalanced and the policy objectives go beyond social welfare and also include fiscal revenues, increasing the number of manufacturing jobs, and closing a trade deficit?

an alternative take on this is that the USMCA compliant exemption is pretty broad a lot of stuff come in near duty free the effective #tariff rate on Canada and Mexico is at 3 percent, statuary fentanyl rates are at 25

📢International Macroeconomics Workshop📢 One of the best intl macro conferences in Europe Submit your papers on trade policy, capital flows, geopolitical uncertainty and dollar dominance by 15 June Keynote: Fabrizio Perri fabrizio perri bankofengland.co.uk/events/2025/oc…