Exchange rate offset to US trade policy: The pricing response of Chinese exporters

Makram Khalil and Felix Strobel

Economics Letters, 2025, vol. 256, issue C

Abstract: The US trade conflict with China in 2018 and 2019 was accompanied by a marked appreciation of the US dollar. We provide evidence that Chinese exporters notably lower their prices in response to a USD appreciation. Our results thus suggest that the effect of the 2018–19 US tariff hikes on US (post-tariff) import prices was largely offset by a price reduction by Chinese exporters. This holds particularly for prices of intermediate goods, which make up a large share of Chinese exports to the US. To the extent that US trade policy was itself the driver of the USD appreciation, it induced significant offsetting effect.

Keywords: Exchange rate pass-through to import prices; Import tariffs; Trade policy (search for similar items in EconPapers)
JEL-codes: E31 F13 F14 F31 F41 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:256:y:2025:i:c:s0165176525004331

DOI: 10.1016/j.econlet.2025.112596

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