Economists Find Importers Paying Section 301 Tariffs, but Consumers Mostly Aren't
An economics working paper found that importers are paying nearly as much for Chinese goods hit by tariffs as they did before Section 201 and 301 tariffs, which means Chinese companies are not the ones bearing the burden, contrary to President Donald Trump's claims. The Harvard University, University of Chicago and Federal Reserve Bank economists said they documented “that the tariffs were almost fully passed through to total prices paid by importers," but that doesn't mean Chinese companies aren't harmed, too. The tariffs would likely reduce the volume of U.S. purchases, even if Chinese companies are able to maintain their profit margins, they said.
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"Using product-level data from several large multi-national retailers, we demonstrate that the impact of the tariffs on retail prices is more mixed," they said. While some products had sharp price increases, they looked at washing machines, handbags, tires, refrigerators and bicycles, and found that most products' prices barely budged after the tariffs were levied. "Our estimates suggest that a 20 percent tariff is associated with a 0.9 percent increase in the retail prices of affected household goods (such as dishes, furniture, linens, toaster ovens, towels, and umbrellas) and a 1.4 percent increase in the retail prices of affected electronics products after one year," the paper said. "Our results suggest that retailers are absorbing a significant share of the increase in the cost of affected imports by earning lower profit margins on those goods," the authors said. But, given the extent of front-running, the authors said they don't know if prices could remain stable.