The gains to the US from tariffs diminish and ultimately vanish when countries impose retaliatory measures, find researchers with the Federal Reserve Bank of Dallas. 

The working paper, published on August 5, says the rationale for imposing tariffs comes from their macroeconomic effects. Countries with sufficient market power can use the levies to influence global relative prices, thereby improving their terms of trade. 

However, the authors – Enrique Martínez García and Michael Sposi – say that