How market reactions to recent U.S. tariffs hint at start of global shift for nation
Work & Economy How market reactions to recent U.S. tariffs hint at start of global shift for nation Christy DeSmith Harvard Staff Writer June 17, 2025 8 min read Economist updates literature on optimal American import-tax rate in world of interconnected trade, investment President Trump’s tariffs, announced on April 2, upset the global economy in new ways. “The financial meltdown they triggered was really striking,” said Oleg Itskhoki, a professor of economics. “What happened to the stock market, what happened to bond yields, what happened to the dollar exchange rate. They’re all connected. You can’t study tariffs anymore without considering what happens in the financial market.” In a new working paper, Itskhoki and longtime collaborator Dmitry Mukhin of the London School of Economics explore what they call “the optimal macro tariff,” or the import tax rate most favorable to U.S. economic interests. The international macroeconomists are known for their work detailing how today’s globalized financial market drives currency valuations....