Tariff passthrough at the border and at the store: evidence from US trade policy

Alberto Cavallo, Gita Gopinath, Brent Neiman and Jenny Tang

No 19-12, Working Papers from Federal Reserve Bank of Boston

Abstract: We use micro data collected at the border and at retailers to characterize the effects brought by recent changes in US trade policy ? particularly the tariffs placed on imports from China ? on importers, consumers, and exporters. We start by documenting that the tariffs were almost fully passed through to the total prices paid by importers, suggesting that the tariffs? incidence has fallen largely on the United States. Since we estimate the response of prices to exchange rates to be far more muted, the recent depreciation of the Chinese renminbi is unlikely to alter this conclusion. Next, using product-level data from several large multinational retailers, we demonstrate that the impact of the tariffs on retail prices is more mixed. Some affected product categories have seen sharp price increases, but the difference between affected and unaffected products is generally quite modest, suggesting that retail margins have fallen. These retailers? imports increased after the initial announcement of possible tariffs, but before their full implementation, so the intermediate passthrough of tariffs to their prices may not persist. Finally, in contrast to the case of foreign exporters facing US tariffs, we show that US exporters lowered their prices on goods subjected to foreign retaliatory tariffs compared to exports of non-targeted goods.

Keywords: trade policy; tariffs; exchange-rate pass-through (search for similar items in EconPapers)
JEL-codes: F01 F13 F14 F4 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2019-11-01
New Economics Papers: this item is included in nep-cna, nep-int and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (51)

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Related works:
Journal Article: Tariff Pass-Through at the Border and at the Store: Evidence from US Trade Policy (2021)
Working Paper: Tariff Passthrough at the Border and at the Store: Evidence from US Trade Policy (2019)
Working Paper: Tariff Passthrough at the Border and at the Store: Evidence from US Trade Policy (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedbwp:19-12

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DOI: 10.29412/res.wp.2019.12

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