Tariff Pass-Through at the Border and at the Store: Evidence from US Trade Policy
American Economic Review: Insights
vol. 3,
no. 1, March 2021
(pp. 19-34)
Abstract
We use microdata collected at the border and the store to characterize the price impact of recent US trade policy on importers, exporters, and consumers. At the border, import tariff pass-through is much higher than exchange rate pass-through. Chinese exporters did not lower their dollar prices by much, despite the recent appreciation of the dollar. By contrast, US exporters significantly lowered prices affected by foreign retaliatory tariffs. In US stores, the price impact is more limited, suggesting that retail margins have fallen. Our results imply that, so far, the tariffs' incidence has fallen in large part on US firms.Citation
Cavallo, Alberto, Gita Gopinath, Brent Neiman, and Jenny Tang. 2021. "Tariff Pass-Through at the Border and at the Store: Evidence from US Trade Policy." American Economic Review: Insights, 3 (1): 19-34. DOI: 10.1257/aeri.20190536Additional Materials
JEL Classification
- E31 Price Level; Inflation; Deflation
- F13 Trade Policy; International Trade Organizations
- F14 Empirical Studies of Trade
- F31 Foreign Exchange
- L11 Production, Pricing, and Market Structure; Size Distribution of Firms