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I am the Dong-Soo Hahn Professor of Global Affairs and Economics at Yale University. My appointment is in the Economics Department and the Jackson School. I study international trade and economic development. I hold affiliations at NBER, JPAL, BREAD, and IGC …
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Working Papers Tariffs in 2025: Short-Run Impacts on the U.S. Economy 2026 Spring Brookings Papers on Economic Activity ❲abstract❳ IIn 2025, the U.S. raised average tariff duties from 2.4% to 9.6%, bringing protectionism to its highest level in eighty years. We explore the structure of these tariffs, estimate their short-run impacts, and summarize the growing literature on their effects. Across trade partners, the tariffs are correlated with trade deficits but not with geopolitical or strategic industrial goals, other than targeting China. In our baseline estimate, 90% of the tariffs are passed through to tariff-inclusive prices paid by U.S. importers. Wages and fiscal revenue offset the losses from higher prices, resulting in aggregate welfare impacts between a gain of 0.10% of GDP and a loss of 0.13%, depending on the response of U.S. terms-of-trade. Among their stated rationales, the tariffs have been most successful in raising federal revenue and diverting trade from China. It remains to be seen whether the tariffs will reduce the trade deficit, lower prices set by foreign exporters, promote manufacturing jobs, increase “friend-shoring” among aligned countries, or reshore key sectors; evidence from 2018-19 and 2025 indicators suggests a narrow path towards achieving these goals. P. Fajgelbaum Trade and Development in a Fracturing World 2025 IMF-FCDO Lower Income Countries Navigating Global Change Conference ❲abstract❳ In a fracturing world, how can low- and middle-income countries (LMICs) continue to leverage trade for economic development? Drawing on recent research at this intersection, this review argues that countries should look inward toward domestic reforms in key factor markets. I review evidence on how trade in LMICs is shaped by frictions in labor, capital, material, land, and information markets, and highlight areas where the evidence base remains thin. I also discuss research showing that trade itself can alter these underlying distortions. I concluded with a discussion of vertical policies relevant for LMICs—particularly the role of services—and suggest areas where further research is needed to assess whether development can be service-led. The Value of De Minimis Imports, r/r Quarterly Journal of Economics ❲abstract, summary❳ A U.S. consumer can import $800 worth of goods per day free of tariffs and administrative fees. Fueled by rising direct-to-consumer trade, these "de minimis" shipments have exploded in recent years, yet are not recorded in Census trade data. Who benefits from this type of trade, and what are the policy implications? We analyze international shipment data, including de minimis shipments, from three global carriers and U.S. Customs and Border Protection. Lower-income zip codes are more likely to import de minimis shipments, particularly from China, which suggests that the tariff and administrative fee incidence in direct-to-consumer trade disproportionately benefits the poor. Theoretically, imposing tariffs above a threshold leads to terms-of-trade gains through bunching, even in a setting with complete pass-through of linear tariffs. Empirically, bunching pins down the demand elasticity for direct shipments. Eliminating §321 would reduce aggregate welfare by $10.9-$13.0 billion and disproportionately hurt lower-income and minority consumers. P. Fajgelbaum …