What Can History Tell Us About Tariff Shocks? | Metals Mine

  • What Can History Tell Us About Tariff Shocks?

    From frbsf.org

    The 15% increase in the average U.S. tariff rate in 2025 was the largest in the modern era. Assessing the likely impacts of such a large and sudden change, or tariff shock, on unemployment and inflation is crucial for monetary policy discussions. In general, if a tariff shock raises inflation, tighter monetary policy could help tame the inflation increase, if other factors remain constant. By contrast, if a tariff shock has little effect on inflation but leads to an increase in unemployment, loosening monetary policy could be helpful. However, there is little consensus on the overall economic effects of tariff ... (full story)

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