Who Pays for the Tariffs and Why? A Tale of Two Countries

Chaonan Feng (), Liyan Han () and Lei Li ()

CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany

Abstract: During the U.S.-China trade war, the U.S. punitive tariffs were almost entirely borne by U.S. importers. In contrast, only 68% of China’s retaliatory tariffs were paid by Chinese importers. The puzzling difference between the U.S. and China is mainly driven by their different import structures and product heterogeneity in tariff pass-through. China mainly imported products with lower tariff pass-through from the U.S., such as agricultural products and aircraft, while the U.S. primarily imported products with higher tariff pass-through from China, such as electronics. Furthermore, we decompose the product-level tariff pass-through and show that a higher ratio of import demand elasticity over export supply elasticity leads to lower tariff pass-through under perfect competition.

Keywords: trade war; tariff pass-through; import structure; product heterogeneity; demand elasticity; supply elasticity (search for similar items in EconPapers)
JEL-codes: F13 F14 F61 (search for similar items in EconPapers)
Pages: 67
Date: 2023-06
New Economics Papers: this item is included in nep-int
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://www.crctr224.de/research/discussion-papers/archive/dp432 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bon:boncrc:crctr224_2023_432

Access Statistics for this paper

More papers in CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany Kaiserstr. 1, 53113 Bonn , Germany.
Bibliographic data for series maintained by CRC Office ().