Tariff Pass-Through at the Border and at the Store: Evidence from US Trade Policy

By Alberto Cavallo, Gita Gopinath, Brent Neiman, Jenny Tang. American Economic Review: Insights, 2019

289 citations recorded by the source corpus.

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. (JEL E31, F13, F14, F31, L11)

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/db4669e1fe0b9dfb80e9fd64ece5852b244a9e4b

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Citations in the corpus

The Return to Protectionism* (2019, unknown): “6 Amiti, Redding, and Weinstein (2019) and Cavallo et al. (2019) also find complete tariff pass-through to border prices in this trade war, and Flaaen, Hortaçsu, and Tintelnot (2019) estimate high tariff pass-through to retail prices for washing machines. Yet a large body of literature has estimated”
Rising Import Tariffs, Falling Export Growth: When Modern Supply Chains Meet Old-Style Protectionism (2020, background): “businesses rather than foreign companies, so part of our results likely stem from the direct increase in input costs (Amiti et al., 2019; Cavallo et al., 2019).”
Disentangling the Effects of the 2018-2019 Tariffs on a Globally Connected U.S. Manufacturing Sector (2019, background): “by these firms that was documented in Cavallo et al. (2019). We note, however, that effects could ultimately materialize if inputs tariffs are sustained for a prolonged period of time.”
The Impact of the 2018 Tariffs on Prices and Welfare (2019, background): “However, De Loecker et al. (2016) examine the effect of lower tariffs in India, while Edmond, Midrigan, and Xu (2015) consider the effects using Taiwanese data.”
Welfare Analysis Meets Causal Inference (2020, unknown): “A classic question in international trade concerns the welfare consequences of import tariffs, such as the 2018 tariffs imposed by the United States on goods from China (Fajgelbaum et al. 2020; Cavallo et al. 2019; Amiti, Redding, and Weinstein 2019a).”