Global and regional effects of the US tariffs on iron, steel and aluminium: A SMART combination of models with a focus on Spain

Abstract

AbstractOn 8 March, US President Donald Trump approved new import tariffs on “iron and steel” and “aluminium” of 25% and 10%, respectively. The aim of this paper is to estimate the impact that this decision might have on the Spanish regions. Our empirical strategy combines three powerful models to address the trade effect both over the global economy, and more specifically, in each Spanish region. First, by means of the SMART simulation model, we estimate the trade effect for 131 countries; then, we compute the intersectoral effects of such shock using the World Input–Output Database (WIOD); finally, we estimate the interregional and intersectoral effects within Spain, using an interregional input–output table. This last step combines both, the immediate product shock over the metal sector in Spain, and the global effect computed by means of the WIOD. The results obtained shows how the US tariffs might induce a total job loss of 185,000 employees worldwide, while in Spain, it may cost 3,500 jobs.