Trade Restrictiveness and Deadweight Losses from US Tariffs

Abstract

This paper calculates a trade restrictiveness index, i.e., the uniform tariff that yields the same welfare loss as an existing tariff structure, for nearly a century of US data. The results show that the average tariff understates the TRI by about 75 percent. The static deadweight loss from US tariffs is about 1 percent of GDP after the Civil War, but falls almost continuously thereafter to less than one-tenth of 1 percent of GDP. Import duties produced an average welfare loss of 40 cents for every dollar of revenue, slightly higher than contemporary estimates of the marginal cost of taxation. (JEL F13, N71, N72)