Journal Article
What Can History Tell Us About Tariff Shocks?
Abstract: The change in the average U.S. tariff rate in 2025 was the largest in the modern era. One way to assess the effects of such a large shock on unemployment and inflation is by looking at data from pre-World War II periods with tariff rate changes of a similar magnitude. Analysis shows that previous tariff hikes raised unemployment and reduced both economic activity and inflation. Uncertainty may be a factor behind these effects: A large tariff increase raises uncertainty, which can depress overall demand and lead to lower inflation.
Access Documents
File(s):
File format is application/pdf
https://www.frbsf.org/wp-content/uploads/el2026-01.pdf
Description: PDF - view
File(s):
File format is text/html
https://www.frbsf.org/research-and-insights/publications/economic-letter/2026/01/what-can-history-tell-us-about-tariff-shocks/
Description: FRBSF - view
Authors
Bibliographic Information
Provider: Federal Reserve Bank of San Francisco
Part of Series: FRBSF Economic Letter
Publication Date: 2026-01-05
Volume: 2026
Issue: 01
Pages: 5