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  • American Economic Review: Insights

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
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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; Currency Exchange Rate; Price; United States

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." American Economic Review: Insights 3, no. 1 (March 2021).

Supplemental Information

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About The Author

Alberto F. Cavallo

Business, Government and the International Economy
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More from the Authors
  • Tracking the Short-Run Price Impact of U.S. Tariffs By: Alberto Cavallo, Paola Llamas and Franco Vazquez
  • Large Shocks Travel Fast By: Alberto Cavallo, Francesco Lippi and Ken Miyahara
  • Price Discounts and Cheapflation During the Post-Pandemic Inflation Surge By: Alberto Cavallo and Oleksiy Kryvtsov
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