Who's Paying for the Us Tariffs? A Longer-Term Perspective

9 Pages Posted: 6 Jan 2020 Last revised: 14 Jan 2020

See all articles by Mary Amiti

Mary Amiti

Federal Reserve Bank of New York

Stephen J. Redding

Princeton University

David E. Weinstein

Columbia University - Graduate School of Arts and Sciences - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: January 2020

Abstract

Using data from 2018, a number of studies have found that recent U.S tariffs have been passed on entirely to U.S. importers and consumers. These results are surprising given that trade theory has long stressed that tariffs applied by a large country should drive down foreign prices. Using another year of data including significant escalations in the trade war, we find that U.S. tariffs continue to be almost entirely borne by U.S. firms and consumers. We show that the response of import values to the tariffs increases in absolute magnitude over time, consistent with the idea that it takes time for firms to reorganize supply chains. We find heterogeneity in the responses of some sectors, such as steel, where tariffs have caused foreign exporters to drop their prices substantially, enabling them to export relatively more than in sectors where tariff passthrough was complete.

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Suggested Citation

Amiti, Mary and Redding, Stephen J. and Weinstein, David E., Who's Paying for the Us Tariffs? A Longer-Term Perspective (January 2020). NBER Working Paper No. w26610, Available at SSRN: https://ssrn.com/abstract=3514348

Mary Amiti (Contact Author)

Federal Reserve Bank of New York ( email )

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New York, NY 10045
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Stephen J. Redding

Princeton University ( email )

Princeton, NJ 08544-1021
United States

HOME PAGE: http://www.princeton.edu/~reddings/

David E. Weinstein

Columbia University - Graduate School of Arts and Sciences - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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