Unequal inflationary effects of tariffs across socio-demographic groups

Hakan Yilmazkuday

International Economics and Economic Policy, 2025, vol. 22, issue 4, No 7, 24 pages

Abstract: Abstract This paper investigates the heterogeneous effects of tariffs on inflation across socio-demographic groups in the U.S., utilizing a structural vector autoregression model that controls for oil prices, output growth, policy rates, and exchange rates. The aggregate tariff pass-through to inflation is estimated at 0.53, with tariffs accounting for approximately 18% of overall inflation volatility. Disaggregated analysis reveals notable variation, where lower-income groups exhibit smaller pass-through but experience a larger contribution of tariffs to their inflation volatility. Occupationally, armed forces personnel experience the highest pass-through, while students experience the lowest. Among racial groups, Native Americans experience the highest pass-through, whereas the unclassified race experiences the lowest. Age-specific analysis indicates the lowest tariff pass-through for individuals aged 75 and over, followed by those aged under 25. These findings are followed by specific policy suggestions to mitigate the unequal effects of tariffs on inflation across socio-demographic groups.

Keywords: Tariffs; Inflation; Pass-through; Income; Race; Age (search for similar items in EconPapers)
JEL-codes: E31 F13 F41 F62 J11 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10368-025-00682-8

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