Here\u2019re the Baker-Bloom-Davis categorical trade policy uncertainty measure and the Caldara et al. Trade Policy Uncertainty index. Why are these measures elevated? In my mind, why aren\u2019t they even higher?<\/p>\n
Figure 1:<\/strong> EPU-trade category (blue, left scale), and Trade Policy Uncertainty index (red, right scale). Source: Baker, Bloom & Davis policyuncertainty.com, and Caldara et al. TPUD.\u00a0<\/em><\/p>\n Trade policy is definitely high.<\/p>\n In a longer time horizon context:<\/p>\n Figure 2:<\/strong> EPU-trade category (blue, left scale), and Trade Policy Uncertainty index (red, right scale). NBER defined peak-to-trough recession dates shaded gray. Source: Baker, Bloom & Davis policyuncertainty.com, Caldara et al., and NBER.<\/em><\/p>\n Are the textual analyses catching something that\u2019s a figment. I don\u2019t think so. Hatzius\/Goldman Sachs graphically illustrates the possible outcomes under certain scenarios.<\/p>\n Source:<\/strong> Hatzius, \u201cGlobal View: Stall Speed,\u201d Goldman Sachs, July 21, 2025.<\/em><\/p>\n Another perspective on the sources of uncertainty is the TACO phenomenon, as graphically illustrated by Richard Baldwin (for the EU, below):<\/p>\n Source:<\/strong> Richard Baldwin<\/a>.<\/em><\/p>\n \u00a0<\/p>\n<\/p><\/div>\n![\"\"](\"https:\/\/econbrowser.com\/wp-content\/uploads\/2025\/07\/eputradetpud7.png\")
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