Tariff Passthrough at the Border and at the Store: Evidence from US Trade Policy

Alberto Cavallo, Gita Gopinath, Brent Neiman and Jenny Tang

No 26396, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We use micro data collected at the border and at retailers to characterize the effects of 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 total prices paid by importers, suggesting that 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 China’s renminbi is unlikely to alter this conclusion. Next, using product-level data from several large retailers, we demonstrate that the tariffs’ impact 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.

JEL-codes: F01 F13 F14 F4 (search for similar items in EconPapers)
Date: 2019-10
New Economics Papers: this item is included in nep-int and nep-opm
Note: EFG IFM ITI ME PE
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Citations: View citations in EconPapers (63)

Published as Alberto Cavallo & Gita Gopinath & Brent Neiman & Jenny Tang, 2021. "Tariff Pass-Through at the Border and at the Store: Evidence from US Trade Policy," American Economic Review: Insights, American Economic Association, vol. 3(1), pages 19-34, March.

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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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