slides Though these slides differ from the ones I saw at the MVEA 2025 conference.
BibTeX
@article{santacreu2023determines,
title={What Determines State Heterogeneity in Response to US Tariff Changes?},
author={Santacreu, Ana Maria and Sposi, Michael and Zhang, Jing},
year={2023},
publisher={FRB of Chicago Working Paper}
}
Abstract
We develop a structural framework to identify the sources of cross-state heterogeneity in response to US tariff changes. We quantify the effects of unilaterally increasing US tariffs by 25 percentage points across sectors. Welfare changes range from–0.8 percent in Oregon to 2.1 percent in Montana. States gain more when their sectoral comparative advantage covaries negatively with that of the aggregate US Consequently,“preferred” changes in tariffs vary systematically across states, indicating the importance of transfers in aligning state preferences over trade policy. Foreign retaliation substantially reduces the gains across states while perpetuating the cross-state variation.
Notes and Excerpts
I saw this at MEA 2025. One of the things the model says is that Wyoming and Montana actually really would benefit from a shutdown of trade.
Appropriately, I later saw a video of a Wyoming Senator praising the tariffs.