NBER study: tariffs cut output

A new National Bureau of Economic Research paper finds U.S. tariff increases have repeatedly cut imports, reduced exports later, and pushed down manufacturing output over time. (nber.org) The paper, released in April 2026, uses U.S. data from 1840 through 2024 and builds a “narrative series” of tariff changes tied to laws, trade deals, and temporary surcharges. The authors are Tamar den Besten, Regis Barnichon, Diego R. Känzig, and Aayush Singh. (nber.org) Their core finding is straightforward: when tariffs rise, imports fall quickly, exports decline with a lag, and overall output and manufacturing activity drop persistently. The authors write that the shock moves through both supply and demand channels. (nber.org) A tariff is a tax on imported goods, so it can protect a domestic producer from foreign competition while also raising costs for factories that buy imported parts or materials. That matters in U.S. manufacturing, where firms often sit inside long supply chains rather than making every input themselves. (nber.org) The timing matters in 2026 because the paper says the sharp increase in U.S. tariff rates in 2025 renewed interest in the broader macroeconomic effects of protectionism. The authors argue older post-World War II data missed much of this because tariff moves were smaller in that era. (nber.org) The new study also reports a split across eras on prices: tariffs raised prices in the full 1840–2024 sample, but prices fell after tariff shocks in the post-World War II period. The authors say that pattern fits changes in monetary policy and stronger foreign retaliation in the modern trade system. (nber.org) That result lines up with earlier cross-country work from the National Bureau of Economic Research. A 2018 NBER paper covering 151 countries from 1963 to 2014 found tariff increases lowered output and productivity in the medium term and raised unemployment, with only small effects on the trade balance. (nber.org) Other NBER work has found similar strain inside U.S. factories. A February 2025 NBER Digest summary of research on 1870 to 1909 reported that higher tariffs were associated with lower labor productivity in manufacturing and with smaller, less productive firms entering protected industries. (nber.org) There is a competing argument on jobs: Joseph Steinberg’s 2025 NBER paper says tariffs can raise total manufacturing employment in the long run in a model, even as they likely reduce it in the short run and force large worker shifts across sectors. That paper also says industries that depend on imported inputs can be hit especially hard during the adjustment. (nber.org) The new paper does not say tariffs never help any firm or industry. It says that across 180 years of U.S. history, the aggregate pattern after tariff spikes has been contractionary, with weaker trade flows and weaker manufacturing output rather than a lasting industrial lift. (nber.org)