{"type":"rich","version":"1.0","title":"Tariff Confusion","description":"If you run a business that exports to the United States, how big is the tariff you have to pay? In 2025 that question was hard to answer. Between February and December, 53 separate announcements introduced, delayed, reinstated or changed US tariffs, with different countries and products pulled in or exempted each time.\n\nKalina Manova (UCL, CEPR) and her colleagues built a database of every one of those announcements, but they also measured  the confusion that those announcements created. She tells Tim Phillips about how tariff confusion has become a second tax on trade, as confusion puts off exporters: but it's one that raises no revenue.\n\nOn average, uncertainty about the actual tariff doubled the damage done to trade by the tariff hikes themselves. For some countries it tripled it. Does this result mean that, if the US cleared up the confusion by not changing its tariffs regularly, it could double tariff income for the same impact on trade?\n\nThe research behind this episode:\n\nManova, Kalina, Dennis Novy, Thomas Sampson, and Aaron Tang. 2026. \"Tariff Confusion.\" (https://cepr.org/publications/dp21688) CEPR Discussion Paper DP21688 (gated).\n\nTo cite this episode:\n\nPhillips, Tim, and Kalina Manova. 2026. \"Tariff Confusion.\" VoxTalks Economics (podcast).\n\nAbout the guest\n\nKalina Manova (https://profiles.ucl.ac.uk/64670-kalina-manova) is Professor of Economics at University College London and a Research Fellow at the Centre for Economic Policy Research. Her work spans global production networks and multinational activity, firm productivity and management, trade policy, and the financial frictions that shape international trade and investment. She holds an AB, AM and PhD from Harvard, and has previously held posts at Stanford, Princeton and Oxford.\n\nResearch cited in this episode\n\nUS Tariff Announcement Database (USTAD). The dataset Manova and her co-authors assembled by hand from US presidential executive orders and proclamations, recording all 53 tariff announcements of 2025 and tracing, for roughly 230 origin countries and more than 18,000 ten-digit product categories, the statutory tariff in place each month.\n\nThe four confusion measures. With no direct way to measure confusion, the paper proxies it four ways: the cumulative number of relevant announcements a firm had to track; the number of possible tariff calculations those announcements could produce (labelled tariff mess, defined as two to the power of the number of announcements); the highest tariff a firm might infer if it heard only the bad news (tariff max); and how far that worst case sits above the true statutory rate (tariff miss).\n\nThe firm survey. A survey of roughly 4,500 firms in the US and Canada in March and April 2025 found that around 45% believed tariffs on Chinese goods were below 20%, when the true average was about 42%; at the same time, 87% underestimated how many announcements had postponed or rolled back tariffs. Firms were wrong in both directions at once.\n\nTrade policy uncertainty. A prior literature on uncertainty about future tariffs, which tends to find that firms delay forming trade relationships when the future is unclear. The paper’s contribution is to separate confusion about current tariffs from uncertainty about future ones, and to show the former bites on its own.\n\nRelationship-specific investment and trust. Trade in goods that require buyers and suppliers to customise to one another, or that sit in stickier supply relationships, proved more resilient to confusion; so did trade with countries whose populations report higher trust in foreigners. Informal trust, rather than formal contract enforcement, did the work of cushioning the shock.\n\nThe IEEPA ruling. In February 2026 the US Supreme Court ruled that the tariffs imposed in 2025 under the International Emergency Economic Powers Act were unlawful. The paper's data stops before the ruling, which generated fresh policy change and, presumably, fresh confusion.\n\nMore VoxTalks Economics episodes\n\nWorld War Trade (https://cepr.org/multimedia/world-war-trade) . Richard Baldwin on how the April 2025 tariffs settled into a trade Cold War, and why the rest of the world kept trading without the US.\n\nEurope in the Middle (https://cepr.org/multimedia/europe-middle) . Pol Antrà s and Beata Javorcik on where redirected Chinese exports go when they can no longer sell in the US, and what that means for European firms and consumers.\n\nHow exchange rates responded to tariffs (https://cepr.org/multimedia/how-exchange-rates-responded-tariffs) . Giancarlo Corsetti on why the dollar fell after Liberation Day when tariffs should, in theory, have pushed it the other way.\n\nRelated reading on VoxEU.org\n\nTrump and Tariffs (https://cepr.org/voxeu/trump-and-tariffs) , a VoxEU debate page collecting research on how the 2025 tariffs are reshaping supply chains, trade relationships and market stability.","author_name":"VoxTalks Economics","author_url":"https://audioboom.com/channels/4966228-voxtalks-economics","provider_name":"Audioboom","provider_url":"https://audioboom.com","width":480,"height":95,"thumbnail_url":"https://audioboom.com/i/43768540/600x600/c","thumbnail_width":600,"thumbnail_height":600,"html":""}