Working Paper: NBER ID: w25767
Authors: Aaron B. Flaaen; Ali Hortasu; Felix Tintelnot
Abstract: We analyze several rounds of U.S. import restrictions against washing machines. Using retail price data, we estimate the price effect of these import restrictions by comparing the price changes of washers with those of other appliances. We find that in response to the 2018 tariffs on nearly all source countries, the price of washers rose by nearly 12 percent; the price of dryers—a complementary good not subject to tariffs—increased by an equivalent amount. Factoring in the effect of dryers and price increases by domestic brands, our estimates for the 2018 tariffs on washers imply a tariff elasticity of consumer prices of between 110 and 230 percent. The 2016 antidumping duties against China—which accounted for the overwhelming majority of U.S. imports—led to minor price movements due to subsequent production relocation to other export platform countries. Perhaps surprisingly, the 2012 antidumping duties against Korea led to relocation of production to China, actually resulting in lower washer prices in the United States. We find that our measure of the tariff elasticity of consumer prices may differ in sign and magnitude from conventional pass-through estimates which are based on a regression of country-specific import price changes on country-specific tariff changes. Production relocation effects, price changes by domestic brands, and price changes of complementary goods all contribute to the differences between these measures.
Keywords: Trade Policy; Washing Machines; Tariffs; Consumer Prices; Production Relocation
JEL Codes: F12; F13; F23; L23; L68
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| 2018 tariffs on washing machines (L68) | price increase of 12% (E30) |
| 2018 tariffs on washing machines (L68) | price increase in clothes dryers (L68) |
| tariff elasticity of consumer prices (D11) | strong passthrough effect (F16) |
| 2016 antidumping duties against China (F18) | minor price movements (E39) |
| 2016 antidumping duties against China (F18) | production relocation to other countries (F29) |
| 2012 antidumping duties against Korea (F18) | decrease in washer prices in the U.S. (N62) |
| production relocation to China (F29) | decrease in washer prices in the U.S. (N62) |