Tariffs

Tariffs are trade barriers enacted via legislation that impose costs on corporations operating outside their home country. They affect profit margins, market capture, and commodity pricing.

Entry point: src/lib/tariffs/tariffEffects.ts8d ago

Overview#

• Scope: National or state-level trade policy
• Target: Foreign corporations operating in the tariff-imposing country
• Effects: Margin penalty, market capture modifier, commodity blend weight shift
• Enactment: Via tariff bill provisions in legislation system

Tariff Structure#

interface Tariff {
  _id: ObjectId;
  countryId: CountryId; // Country imposing the tariff
  scopeType: string; // "economy_wide" | "sector" | "origin_country" | "corporation"
  targetSectorType?: string; // For sector scope
  targetOriginCountryId?: string; // For origin_country scope
  targetCorporationId?: ObjectId; // For corporation scope
  rate: number; // 0-100 (percentage points)
  sourceBillId: ObjectId; // Enacting legislation
  createdAt: Date;
  updatedAt: Date;
}

Scope Types#

Composite Key#

Tariffs use a five-field upsert key to prevent duplicates:

{
  (countryId, scopeType, targetSectorType, targetOriginCountryId, targetCorporationId);
}

Re-enacting the same provision updates the existing tariff rather than creating a duplicate.

FTA Override Layer#

Free trade agreements zero out all tariff layers between the partnered countries. When two countries are bound by an active FTA (organizationLegislation doc, type: "free_trade_agreement", status: "active"), every C(n,2) pair among the FTA's parties is treated as tariff-free between those two countries, this overrides economy_wide, sector, origin_country, and corporation scopes alike.

// src/lib/tariffs/ftaOverrides.ts
export function isFtaActive(pairs: FtaPairSet, a: string, b: string): boolean {
  if (a === b) return true; // domestic, treated as fully integrated
  return pairs.has(ftaPairKey(a as CountryId, b as CountryId));
}

getEffectiveTariffRate() takes an optional activeFtaPairs set and short-circuits to 0 before summing any tariff layer when the sector country and the corp HQ country are FTA partners. The same FTA coverage also proportionally neutralizes the domestic malus, the commodity blend weights, and the country-level inflation-pressure input (computeCountryTariffPressure), so an FTA that zeroes the corporate-margin channel is consistent everywhere else tariffs feed in, a tariff neutralized by FTA does not still drive consumer-price inflation or blend weighting.

Territorial Invariant#

Critical: Only tariffs where tariff.countryId === sectorCountryId are consulted. A tariff imposed by the US on Chinese corps only applies to sectors operating in the US, not to Chinese sectors operating in third countries.

// getEffectiveTariffRate():51
if (t.countryId !== sectorCountryId) continue;

Margin Modifiers#

Foreign Corporations#

Foreign corporations pay half the effective tariff rate as a margin penalty, not the full rate:

// getForeignTariffMarginModifier():283-305
const rate = getEffectiveTariffRate(tariffs, sectorCountryId, sectorType, corpHqCountryId, corpId, activeFtaPairs);
if (rate === 0) return 0;
// Halved: a 40% tariff gives -20pp margin penalty, not -40pp.
// Full 1:1 ratio made tariffs too punitive for foreign corps operating
// in the tariff country, effectively killing their margins.
return -rate / 2;

Example: 25% tariff → -12.5pp margin modifier

Domestic Corporations#

Domestic corporations pay a smaller supply-chain friction malus from economy-wide and sector tariffs only:

// getDomesticTariffMalus():324-352
let total = 0;
for (const t of tariffs) {
  if (t.countryId !== sectorCountryId) continue;
  if (t.scopeType === "economy_wide") total += t.rate;
  else if (t.scopeType === "sector" && t.targetSectorType === sectorType) total += t.rate;
}
const T = Math.min(100, total);
return -(T / 100) * 10; // -0 to -10pp

Rationale: Broad tariffs create domestic supply-chain friction, but targeted origin-country and corporation-specific tariffs are too narrow to affect domestic costs.

Effective Tariff Rate Calculation#

The effective rate is the sum of all applicable tariffs:

// getEffectiveTariffRate():33-70
if (sectorCountryId === corpHqCountryId) return 0; // Domestic corps pay no tariff

for (const t of tariffs) {
  if (t.countryId !== sectorCountryId) continue;
  if (t.rate === 0) continue;

  if (t.scopeType === "economy_wide") {
    total += t.rate;
  } else if (t.scopeType === "sector" && t.targetSectorType === sectorType) {
    total += t.rate;
  } else if (t.scopeType === "origin_country" && t.targetOriginCountryId === corpHqCountryId) {
    total += t.rate;
  } else if (t.scopeType === "corporation" && t.targetCorporationId === corpId) {
    total += t.rate;
  }
}
return Math.min(100, total);

Stacking: Multiple tariffs stack additively. A 20% economy-wide + 15% sector tariff = 35% effective rate.

Commodity Blend Weights#

Commodity margin calculation blends three price sources: global, national, and local (state-level). Tariffs shift weight from global to national, not to local; the local weight is fixed:

// getTariffBlendWeights():194-244
let blendRate = 0;
for (const t of tariffs) {
  if (t.countryId !== sectorCountryId) continue;
  if (t.rate === 0) continue;

  if (t.scopeType === "economy_wide") blendRate += t.rate;
  else if (t.scopeType === "sector" && t.targetSectorType === sectorType) blendRate += t.rate;
  else if (t.scopeType === "origin_country") {
    const key = `${sectorCountryId}:${t.targetOriginCountryId}:${sectorType}`;
    if (allSectorKeys.has(key)) blendRate += t.rate;
  } else if (t.scopeType === "corporation") {
    const key = `${sectorCountryId}:corp:${t.targetCorporationId}:${sectorType}`;
    if (allSectorKeys.has(key)) blendRate += t.rate;
  }
}

const T = Math.min(100, blendRate);
const tariffEffect = T / 100;
const localWeight = 0.25; // fixed
const nationalWeight = 0.25 + tariffEffect * 0.25; // 0.25 → 0.50
const globalWeight = 0.5 - tariffEffect * 0.25; // 0.50 → 0.25

Rationale: Tariffs make national commodity markets more relevant to margin calculation, reflecting that import costs push buyers toward domestically-priced goods; the local/state component is held fixed and does not move with tariff pressure.

FTA coverage scales the broad scopes (economy_wide, sector) down by (1 - partner-exposure share) and zeroes out narrow scopes (origin_country, corporation) targeting an FTA partner, the same treatment used by the corporate-margin and inflation-pressure channels.

Market Capture (Split Attacks)#

Tariffs affect market capture during sector split attacks:

// getSplitCaptureMultiplier():364-373
const T = Math.max(0, Math.min(100, effectiveTariffRate));
if (isDomesticSplittingForeign) {
  return 1.0 + (T / 100) * 0.5; // 1.0 → 1.5× (domestic bonus)
}
return 1.0 - (T / 100) * 0.5; // 1.0 → 0.5× (foreign penalty)

Effect: Domestic corps gain market share as foreign competitors are priced out.

Enactment#

Tariffs are enacted via legislation:

// applyTariffProvision():392-424 (upsert; the surrounding function runs 392-492)
const filter = {
  countryId,
  scopeType: provision.scopeType,
  targetSectorType: provision.targetSectorType ?? null,
  targetOriginCountryId: provision.targetOriginCountryId ?? null,
  targetCorporationId: provision.targetCorporationId
    ? new ObjectId(String(provision.targetCorporationId))
    : null,
};

await db.collection<Tariff>("tariffs").updateOne(
  filter,
  {
    $set: { rate: provision.rate, sourceBillId, updatedAt: now },
    $setOnInsert: { createdAt: now },
  },
  { upsert: true }
);

Collections#

tariffs#

Key Files#

Related Documentation#

• Commodities, Commodity pricing, blend weights, margin modifiers
• Subsidies, Domestic industry support (counterpart to tariffs)
• Legislation System, Bill enactment process