To What Extent Are Tariffs Offset By Exchange Rates?

Olivier Jeanne and Jeongwon Son ()

No 15125, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: In theory, we should expect tariffs to be partially offset by a currency appreciation in the tariff-imposing country or by a depreciation in the country on which the tariff is imposed. We find, based on a calibrated model, that the tariffs imposed by the US in 2018-19 should not have had a large impact on the dollar but may have significantly depreciated the renminbi. This prediction is consistent with a high-frequency event analysis looking at the impact of tariff-related news on the dollar and the renminbi. We find that tariffs explained at most one fifth of the dollar effective appreciation but around two thirds of the renminbi effective depreciation observed in 2018-19.

Keywords: Exchange rates; Tariffs; Dollar; Renminbi (search for similar items in EconPapers)
JEL-codes: F31 F41 (search for similar items in EconPapers)
Date: 2020-08
New Economics Papers: this item is included in nep-int and nep-opm
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Citations: View citations in EconPapers (7)

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Related works:
Working Paper: To What Extent Are Tariffs Offset by Exchange Rates? (2020)
Working Paper: To What Extent Are Tariffs Offset By Exchange Rates? (2020)
Working Paper: To what extent are tariffs offset by exchange rates? (2012)
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