Price Effects of US-China Trade Wars

Thuy Hang Duong and Weifeng Larry Liu

CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University

Abstract: This paper examines the short-run price effects of US tariffs during the Trump administrations. Using a monthly industry-level event-study with staggered treatment timing, we estimate their impacts on domestic producer price inflation across two trade war episodes over 2018-2019 and 2024-2025. The results show that tariffs increased inflation in both episodes, but the magnitude and persistence differed. In 2018-2019, tariffs led to large and sustained price increases, driven by strong cost pass-through from imported intermediate inputs from China. In contrast, in 2024-2025, despite more aggressive tariff measures, inflationary effects were not proportionally larger and dissipated more quickly. This attenuation reflects global supply chain reallocation following the first US-China trade war and the COVID-19 pandemic, as US firms diversified away from Chinese inputs, weakening input-cost transmission.

Keywords: tariffs; inflation; trade war; event-study design (search for similar items in EconPapers)
JEL-codes: C23 E31 F13 F14 L11 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2026-05
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Persistent link: https://EconPapers.repec.org/RePEc:een:camaaa:2026-30

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