Tariffs can boost U.S. economic growth over the long term even when foreigners absorb just a tiny fraction of their cost, according to the Federal Reserve’s main economic model.
The Federal Reserve Board’s large-scale model, known as FRB/US, indicates that a broad 10 percent tariff on non-oil goods can leave real GDP about 0.28 percent higher after ten years if foreign producers absorb just over one percent of the total tariff bill. Business investment also ends up higher.
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