Working Paper: NBER ID: w26396
Authors: Alberto Cavallo; Gita Gopinath; Brent Neiman; Jenny Tang
Abstract: We use micro data collected at the border and at retailers to characterize the effects of recent changes in US trade policy -- particularly the tariffs placed on imports from China -- on importers, consumers, and exporters. We start by documenting that the tariffs were almost fully passed through to total prices paid by importers, suggesting that incidence has fallen largely on the United States. Since we estimate the response of prices to exchange rates to be far more muted, the recent depreciation of China’s renminbi is unlikely to alter this conclusion. Next, using product-level data from several large retailers, we demonstrate that the tariffs’ impact on retail prices is more mixed. Some affected product categories have seen sharp price increases, but the difference between affected and unaffected products is generally quite modest, suggesting that retail margins have fallen. These retailers' imports increased after the initial announcement of possible tariffs, but before their full implementation, so the intermediate passthrough of tariffs to their prices may not persist. Finally, in contrast to the case of foreign exporters facing US tariffs, we show that US exporters lowered their prices on goods subjected to foreign retaliatory tariffs compared to exports of non-targeted goods.
Keywords: tariffs; import prices; retail prices; US trade policy
JEL Codes: F01; F13; F14; F4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Tariffs imposed on imports from China (F19) | Total prices paid by US importers (F14) |
| Tariffs imposed on imports from China (F19) | Extariff price (F14) |
| Extariff price (F14) | Total prices paid by US importers (F14) |
| Tariffs imposed on imports from China (F19) | Retail prices for affected household goods (D19) |
| Retaliatory tariffs (F19) | Extariff export prices (F14) |
| Extariff export prices (F14) | Nontargeted goods prices (P22) |