The Price, Quantity, and Welfare Impacts on the EU Following Increased Import Tariffs: An empirical estimation of 2018’s trade retaliation against the U.S.

Abstract: This paper explores the impacts of EU’s retaliatory tariffs towards the U.S. on prices, quantities, and welfare. Over the course of 2018, the Trump Administration imposed tariffs on EU steel and iron, to which the EU implemented counter measures of increased tariffs on U.S. imports to the Union. Using standard economic methods, this paper finds that the tariffs were almost completely passed through to domestic prices hitting consumers and importers. The cumulative reduction in EU’s real income over the eleven months passed the imposition of tariffs is measured to be €56.2 million.