2020
Working Paper
HBS Working Paper Series

Tariff Passthrough at the Border and at the Store: Evidence from U.S. Trade Policy

By: Alberto Cavallo, Gita Gopinath, Brent Neiman and Jenny Tang

Format:Print
| Language:English
| Pages:47

Abstract

We use micro data 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 passthrough is much higher than exchange rate passthrough. 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.

Keywords

Trade Policy; Tariffs; Exchange Rate Passthrough; Economics; Trade; Policy; Inflation and Deflation; United States; China

Citation

Cavallo, Alberto, Gita Gopinath, Brent Neiman, and Jenny Tang. "Tariff Passthrough at the Border and at the Store: Evidence from U.S. Trade Policy." NBER Working Paper Series, No. 26396, October 2019. (Revised June 2020. Harvard Business School Working Paper, No. 20-041, October 2019)