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NERA Managing Directors Dr. Jeffrey A. Eisenach and Dr. David Harrison Jr. conducted an analysis of the economic impacts of tariffs on imports of primary and semi-finished aluminum into the US.

NERA estimated the full macroeconomic effects of tariffs using a state-of-the-art macroeconomic model developed by Regional Economic Models, Inc. (REMI), which incorporates the complex “multiplier effects” that arise as the positive and negative impacts of tariffs ripple through the economy. The analysis included the effects of: (a) increased output and employment in the domestic primary and semi-finished products sectors; (b) increased federal government revenues due to the tariff; and (c) reduced output and employment, and higher consumer prices, in the remainder of the economy. The REMI model incorporates the complex “multiplier effects” that arise as the positive and negative impacts of the tariff ripple through the economy.

NERA also assessed the likely effects of a targeted tariff focused on semi-finished aluminum products in contrast to the across-the-board tariff including both primary and semi-finished aluminum.

In its study, “Impacts of Potential Aluminum Tariffs on the US Economy,” NERA concluded putting tariffs on aluminum would lead to substantial negative impacts on the US economy. Tariffs on aluminum would result in reductions in output, employment, and personal income in the rest of the economy that would significantly exceed any gains in the aluminum sector. Indeed, aluminum tariffs would negatively affect manufacturing employment as a whole.

The study also concludes that a tariff targeted on the primary aluminum sector may increase gains to overall aluminum sector employment. Such a targeted tariff also would more directly address policy concerns about foreign subsidies and over-capacity (primarily Chinese) in the market for semi-finished aluminum than would an across-the-board tariff.