Who Paid for the 2018 Trade Tariffs?

Who Paid for the 2018 Trade Tariffs?

In this episode of 'Questions in Finance,' Professors Kate Holland and Veljko Fotak discuss the academic research on the impact of the 2018 US trade tariffs. The conversation revolves around who ultimately paid for these tariffs—US consumers and importers—and the nuanced effects on retail prices. The discussion covers the impact of retaliatory tariffs on US exporters, before focusing on the winners—select US producers and the government, raising more revenue. The episode also explores the political implications, revealing how tariffs were strategically used to gain votes in battleground states and the broader economic consequences, including substantial redistribution of wealth and small net losses for the aggregate US economy. The episode concludes with a mapping of lessons from the past to the trade war emerging in 2025.

 

Timeline:

00:00 Who Paid for the 2018 Trade Tariffs?

00:52 Welcome to Questions in Finance

01:31 The Three Papers

05:24 A Bit of Recent History

12:36 So... Who Pays?

16:03 Currency Adjustments

18:06 Retaliatory Tariffs

24:35 Import Prices Vs. Retail Prices

32:09 Quantifying the Impact of Tariffs

45:30 Summary of the Main Findings

49:31 The Political Effects

57:19 Future Episodes

58:01 Mapping What We Learned onto the Present

01:05:32 Concluding Remarks

 

Bibliography:

Amiti, Mary, Stephen J. Redding, and David E. Weinstein. "The impact of the 2018 tariffs on prices and welfare." Journal of Economic Perspectives 33, no. 4 (2019): 187-210.

Cavallo, Alberto, Gita Gopinath, Brent Neiman, and Jenny Tang. "Tariff pass-through at the border and at the store: Evidence from us trade policy." American Economic Review: Insights 3, no. 1 (2021): 19-34.

Fajgelbaum, Pablo D., Pinelopi K. Goldberg, Patrick J. Kennedy, and Amit K. Khandelwal. "The return to protectionism." The Quarterly Journal of Economics 135, no. 1 (2020): 1-55.

Feng, Chaonan, Liyan Han, and Lei Li. "Who pays for the tariffs and why? A tale of two countries." (2023). SSRN Working Paper: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4477985

 

Soundtrack:

The soundtrack is based on "Walk on a Funky Street" by MondayHopes. Thanks for the music and keep up the good work! Use is under the Pixabay Content License.