The Price Effects and Incidence of Recent U.S. Tariff Actions
Paper Session
Sunday, Jan. 3, 2027 8:00 AM - 10:00 AM (EST)
- Chair: Mine Senses, Johns Hopkins University
Did Foreigners Pay America’s Tariffs?
Abstract
Transaction-level quantity discounts are a pervasive feature of US trade, shaping both price variation and tariff incidence. Using administrative microdata, we show that these discounts reflect transaction-level scale economies rather than market power. Accounting for these micro-level economies resolves a key puzzle: while observed import prices rose one-for-one with 2018-2019 US tariffs, we show this was driven by the loss of scale economies as transaction sizes collapsed. Controlling for this scale effect, the strategic pass-through of tariffs to scale-free prices falls to 60 percent, implying foreign exporters absorbed a significant share of the burden through reduced markups.Tariff Pass-through and Import Reallocation
Abstract
Despite their unprecedented level, U.S. tariff hikes since January 2025 have had relatively muted effects on domestic inflation. Previous studies attribute this to absorbed margins by U.S. importers and distributors, based on estimates indicating near-zero pass-through of tariffs to duty-exclusive import prices at the border. We provide new evidence that product-level aggregate import prices, duty-exclusive, declined almost one-to-one with tariff increases. While variety-level (country-product) import prices remained stable—consistent with previous findings—U.S. imports reallocated within products toward lower-priced sources, thereby limiting pass-through to consumer prices. Quality estimates further suggest that, while reallocation toward lower priced and lower appeal sources amplified the observed price response, aggregate import prices declined with tariff increases even on a quality adjusted basis.Who Pays for Tariffs Along the Supply Chain? Evidence from European Wine Tariffs
Abstract
We study how tariffs affect prices along the supply chain using product-level data from a large U.S. wine importer during the 2019-2021 U.S. tariffs on European wines. Combining confidential transaction prices with foreign suppliers, U.S. distributors, and retail prices, we trace tariff pass-through from producers to consumers. Pass-through at the border is incomplete, yet consumers paid more than the tariff revenue collected. The dollar markups per bottle for the importer contracted, but expanded for the combined distributor-retailer segment. Price changes along the chain reached consumers after one year. We also document tariff engineering that biases unit values in trade statistics.To Find Relative Earnings Gains After the China Shock, Look Upstream and Outside Manufacturing
Abstract
We find that US workers outside manufacturing exhibit relative earnings increases after US trade liberalization with China. These relative gains cumulate over time as the beneficial effect of a worker’s upstream exposure—increased competition from China in input markets—more than offsets the detrimental impact of her own and downstream (customer) exposures. These relative gains are smaller for non-manufacturing workers with less ex ante firm tenure and lower initial earnings, and are absent among manufacturing workers due to a lack of upstream gains and stronger downstream losses.JEL Classifications
- F1 - Trade
- E3 - Prices, Business Fluctuations, and Cycles