Modelling the economic impact of US tariffs on Scotland and the rest of the world: technical paper

Conclusion

This report sets out the structural gravity methodology and explores the modelled impact of US tariffs and retaliations to them on the Scottish economy.

Imposing tariffs on a wide range of products on all trading partners represents a significant increase in trade barriers and a resulting reduction in global trade and production, with world output estimated to be 0.3% lower than without the tariffs. The most affected countries are the USA, Canada, Mexico, and China. The model therefore reinforces economic theory, which tends to find that tariffs can harm the economy of the country applying them as much as the targeted countries. The overall impact on Scotland and the rest of the UK is found to be very small, even without considering the US–UK Economic Prosperity Deal.

Some sectors in the Scottish economy are affected more than others, and in general this reflects the magnitude of tariff faced and the relative exposure to the US market, but as discussed, the precise values for individual sectors should be interpreted with caution.