Tariffs across the supply chain by Nicolò Gnocato, Vanessa Gunnella, Carlos Montes-Galdon, Tobias Schuler, Giovanni Stamato published by VOXEU (5/2025).
Tariffs disrupt trade flows and influence prices, but their broader impact depends on how they are structured and the type of goods targeted. This column examines the economic implications of tariffs across the supply chain, with a particular focus on how different modes of retaliation to US tariffs impact economic activity, inflation, and trade. The authors find that the effects vary significantly. A broad retaliation strategy targeting both final and intermediate goods would result in a more pronounced contraction in GDP and more persistent inflation than retaliation that targets only final goods.