Macroeconomic effects of tariffs shocks: The role of the effective lower bound and the labour market

•Tariffs cause a recession in the country on which they are imposed.•If the effective lower bound (ELB) on interest rate binds, the recession is worse.•In a monetary union with ELB, tariffs on one country only cause union-wide recession.•If imports are complements, tariffs are recessionary also for competing countries.