Armington tariff simulator

Method

Observed BACI bilateral-product flows are used where available. Uncovered product-years use explicitly labeled proportional allocation from aggregate bilateral trade. Values are converted from thousands of USD to USD; each result records source revisions and fallback coverage.

The CES calculation holds baseline utility and producer prices fixed. Baseline expenditure shares include the supplied baseline tariffs. The ten largest countries by trade are represented separately, together with the country of interest and policy countries; all others are grouped as ROW.

HS6 substitution elasticities come from Soderbery (2018). Single-product scenarios use the stored magnitude; multi-product scenarios weight magnitudes by the country of interest’s exports, with a minimum weight of one in the stored thousands-USD units. Products without estimates are omitted from a mixed basket’s elasticity average. Sigma = 4 is used only when no scenario estimate is available.

The consumer effect is the negative of the extra expenditure needed to maintain baseline utility. The reported net effect adds the change in tariff revenue. Producer surplus is zero under fixed producer prices and perfectly elastic supply.

Supplier losses and gains are allocated proportionally within each importer, bounded by both budgets. Only the ten largest allocations are displayed. This accounting attribution does not identify actual rerouting.

The separate GET estimator applies an HS4 import-demand elasticity to a tariff change relative to the latest available MFN baseline.

Equations

Validation

• The policy endpoint recalculates at 0.5, 0.75, 1.0, 1.25 and 1.5 times the selected sigma, including the selected estimate without a floor of one. This parameter-sensitivity range is not a confidence interval.
• No out-of-sample or external benchmark validation is documented in the named repository sources.

Limitations

• Observed flows and proportional fallback estimates can coexist. Check the result’s source revisions and fallback coverage before interpreting product-level changes.
• This is a compensated partial-equilibrium calculation, with no domestic production, income-budget closure, wage adjustment or market-clearing solve. The reported net effect is not economy-wide welfare.
• The price result is a CES import-price index normalized to one, not a measured unit price or total import bill.
• Tariffs omitted from the policy input are treated as zero in both states. Phase-in results are static recalculations at successive tariff rates, not a dynamic adjustment model.
• Most countries are aggregated into ROW, although the country of interest and policy countries are kept separately.
• The trade-flow inputs are the live BACI estate. The elasticities are external estimates with no BACI vintage of their own (Soderbery 2018 at HS6; the HS4 import-demand elasticities have no provenance recorded in this repository), so one result combines a dated trade panel with undated elasticities.
• The HS4 GET endpoint's dollar impact applies the elasticity to global exports of the HS4 line, not to one country's imports.
• When the elasticity table or a product estimate is unavailable, the full simulator uses sigma = 4.0.

References

• Armington (1969), A Theory of Demand for Products Distinguished by Place of Production.
• Soderbery (2018), Trade Elasticities, Heterogeneity, and Optimal Tariffs, Journal of International Economics 114.

Endpoints