CGE MODELIGNG OF THE 2018 STEEL AND ALUMINUM TARIFFS

Open Access
Author:
Pautz, Isaac C
Area of Honors:
Economics
Degree:
Bachelor of Science
Document Type:
Thesis
Thesis Supervisors:
  • Jonathan Eaton, Thesis Supervisor
  • Russell Paul Chuderewicz, Honors Advisor
Keywords:
  • tariff
  • tariffs
  • general equilibrium
  • trade
Abstract:
This paper seeks to estimate the effects of the 2018 steel and aluminum tariffs on the U.S. and on the foreign trade market. To do this, a Computable General Equilibrium (CGE) model is implemented to conduct counterfactual analysis on the tariff changes. The model used in this paper comes from Caliendo and Parro (2015) and is a multi-sector, multi-country model, with intermediate goods. The results from computing the general equilibriums from the tariff changes show that the U.S. increases its welfare by 0.0260%, the U.S. decreases its real wages by 0.0811%, and that, overall, the volume of trade for other countries and the terms of trade for other countries decreases worldwide. These results support the idea that the U.S. is shifting the weight of these tariffs onto other countries by causing a significant decrease in demand of imported goods.