16.07.2025

The making of a supply shock: Tariff propagation via domestic production networks

Authors from Department of Macroeconomics publish column in VoxEu from the Centre for Economic Policy Research (CEPR)

On the 9th of July, Anastasia Antonova, Luis Huxel, Mykhailo Matvieiev and Gernot Müller published their column on “The making of a supply shock: Tariff propagation via domestic production networks” at VoxEU, the policy portal of the Centre for Economic Policy Research (CEPR).

In their contribution they discuss whether import tariffs can reduce trade deficits or boost certain industries and introduce a model, calibrated to the US economy to illustrate the effects of uniform import tariffs. 

They show that this kind of tariff generates both expansionary effects upstream and contractionary effects downstream and is highly inflationary, reflecting its hybrid nature as both a positive demand shock and a negative supply shock.

To read the full article, visit VoxEU by clicking this link.