Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/227927
Authors: 
Cavallo, Alberto
Gopinath, Gita
Neiman, Brent
Tang, Jenny
Year of Publication: 
2019
Series/Report no.: 
Working Papers No. 19-12
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 pass-through 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.
Subjects: 
trade policy
tariffs
exchange rate passthrough
JEL: 
F01
F13
F14
F4
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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