New Department Working Paper: Pau Pujolas

We have another Department Working Paper from Pau Pujolas!

Fiscal Limits to Protectionism: The 2025 U.S. Tariff Laffer Curve

Pau Pujolas is an Associate Professor with the Department of Economics, and previous graduate placement officer.

Pujolas’s primary research interests focus on the intersection of international trade and macroeconomics. He has recently studied how the emergence of the Oil sands has affected Canadian productivity, how costly it is to undergo a new wave of trade disruptions, and the desirability of a trade war between countries. His work has been cited by the White House, and it has been published in leading journals in economics, including the International Economic Review, the Canadian Journal of Economics, the Review of Economic Dynamics, and the Annual Review of Economics. His research has been covered in media outlets such as Washington Post, Wall Street Journal, Financial Times, The Times, The Independent, the Globe and Mail, Global News, the Hub, MacLean’s, Nada Es Gratis, and Foco Economico. 

His new working paper is titled, “Fiscal Limits to Protectionism: The 2025 U.S. Tariff Laffer Curve,” joint with Jack Rossbach.

Abstract

We quantify the Tariff Laffer Curve for the U.S. using a multi-sector Ricardian model calibrated to the 2025 US trade war. We find revenue-maximizing tariffs of 20–30 percent and welfare-maximizing rates of 0–10 percent. We define the Marginal Fiscal Efficiency Index to partition tariffs into welfare-improving, trade-off, and revenue-decreasing regions. Expanding the trade war to more partners raises peak revenue even under retaliation, whereas coordinated retaliation sharply erodes welfare. By January 2026, 20 percent of U.S. tariffs exceed their Laffer peaks. Inverse-optimum estimation reveals diminished U.S. concern for foreign welfare, punitive treatment of China, and rising revenue motives.

For the full set of working papers, visit RePEC/ideas.