The Return to Protectionism*

Fajgelbaum, Pablo; Goldberg, Pinelopi Koujianou; Kennedy, Patrick; Khandelwal, Ankur

doi:10.1093/qje/qjz036

Cited by 467 publications

(338 citation statements)

References 53 publications

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“…Alternatively, if the tariff's incidence falls primarily on the importer, the ex-tariff import price will be relatively stable, raising the total cost the importer must pay (inclusive of tariffs) to buy foreign goods. 2 Our analyses indicate that the price incidence of US import tariffs falls largely on the United States, consistent with the results obtained using Census unit values in Amiti, Redding, and Weinstein (2019) and Fajgelbaum, Goldberg, Kennedy, and Khandelwal (2019).This result does not, of course, imply that China benefits from the policy. Even if Chinese exporters earned the same price and profit margin per unit exported to the United States, the tariffs would reduce the number of units sold.…”

Section: Introductionsupporting

confidence: 80%

Tariff Passthrough at the Border

Gopinath¹,

Calvallo²,

Neiman³

et al. 2019

IMF Working Papers

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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 total prices paid by importers, suggesting 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 multi-national 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 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.

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Section: Introductionsupporting

confidence: 80%

Tariff Passthrough at the Border

Gopinath¹,

Calvallo²,

Neiman³

et al. 2019

IMF Working Papers

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“…Because President Trump's election was a surprise to many observers, it is unlikely that the tariffs were anticipated in the affected industries. Although the extent to which the tariff changes were a surprise could have changed over time as the trade war unfolded, Fajgelbaum et al (2019) find little evidence of pre-trends in the affected industries. In addition, the Trump administration's tariffs are large enough to create meaningful variation across products, time, and countries, which makes it relatively straightforward to discern their effects using conventional datasets.…”

Section: How Did Tariffs Affect Us Prices?mentioning

confidence: 87%

“…The tariffs introduced by the Trump administration during 2018 have stimulated a burgeoning literature on their economic effects, including Fajgelbaum et al (2019), Flaaen, Hortaçsu, and Tintelnot (2019), and Cavallo et al (2019). In this article, we use these 2018 tariffs as a natural experiment to illustrate the conventional conceptual framework.…”

mentioning

confidence: 99%

The Impact of the 2018 Tariffs on Prices and Welfare

Amiti

Redding

Weinstein

2019

Journal of Economic Perspectives

336

194

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We examine conventional approaches to evaluating the economic impact of protectionist trade policies. We illustrate these conventional approaches by applying them to the tariffs introduced by the Trump administration during 2018. In the wake of this increase in trade protection, the United States experienced substantial increases in the prices of intermediates and final goods, dramatic changes to its supply-chain network, reductions in availability of imported varieties, and the complete pass-through of the tariffs into domestic prices of imported goods. Therefore, the full incidence of the tariffs has fallen on domestic consumers and importers so far, and our estimates imply a reduction in aggregate US real income of $1.4 billion per month by the end of 2018. We see similar patterns for foreign countries that have retaliated with their own tariffs against the United States, which suggests that the trade war has also reduced the real income of these other countries.

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“…We now turn to the (short-term) price and welfare effects of the tariff increases on the United States analyzed in various studies based on observed changes in the data. Various publications on this come to a similar conclusion (Amiti et al, 2019a(Amiti et al, , 2019bFajgelbaum et al, 2019;and Cavallo et al, 2019) on the price effects in the US. Both in 2018 and 2019 there has been a complete passthrough of US tariffs to importer prices.…”

Section: Insights From the Literature With Ex Post Analysesmentioning

confidence: 56%

An Economic Analysis of the US-China Trade Conflict

2020

Covid-19 Reports

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The Return to Protectionism*

Cited by 467 publications

References 53 publications

Tariff Passthrough at the Border

Tariff Passthrough at the Border

The Impact of the 2018 Tariffs on Prices and Welfare

An Economic Analysis of the US-China Trade Conflict

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