Tariffs Tax the Poor More: Evidence from Household Consumption During the US-China Trade War

Hong Ma, Luca Macedoni, Jingxin Ning and Mingzhi (Jimmy) Xu

No 11610, CESifo Working Paper Series from CESifo

Abstract: Using disaggregated US household expenditure data, we study the distributional consequences of the US-China trade war. We estimate a highly flexible demand system to compute household-specific price indexes. The increases in US tariffs on Chinese products between 2018 and 2019 led to an average price index increase of 1.09%, with a disproportionately larger impact on low-income households. Specifically, we document a 0.9 percentage point smaller increase in the household price index for the top 20% income households compared to the bottom 20%. The dif-ference stems from wealthier households’ greater expenditure adjustments and smaller reductions in product variety.

Keywords: US-China trade war; tariffs; income inequality; distributional effects of tariffs; household consumption (search for similar items in EconPapers)
JEL-codes: D31 F13 F14 (search for similar items in EconPapers)
Date: 2025
New Economics Papers: this item is included in nep-cna, nep-int and nep-pbe
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