Working Paper: NBER ID: w25672
Authors: Mary Amiti; Stephen J. Redding; David Weinstein
Abstract: This paper explores the impacts of the Trump administration’s trade policy on prices and welfare. Over the course of 2018, the U.S. experienced substantial increases in the prices of intermediates and final goods, dramatic changes to its supply-chain network, reductions in availability of imported varieties, and complete passthrough of the tariffs into domestic prices of imported goods. Overall, using standard economic methods, we find that the full incidence of the tariff falls on domestic consumers, with a reduction in U.S. real income of $1.4 billion per month by the end of 2018. We also see similar patterns for foreign countries who have retaliated against the U.S., which indicates that the trade war also reduced real income for other countries.
Keywords: Trade War; Tariffs; Prices; Welfare; US Economy
JEL Codes: F13; F14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Tariffs (F19) | Domestic Consumers (D19) |
| Tariffs (F19) | US Real Income (D31) |
| Tariffs (F19) | Price Increases in Domestic Markets (P22) |
| Tariffs (F19) | Trade Redirection (F16) |
| Tariffs (F19) | Imports (F14) |