What washing machines can teach us about the cost of tariffs

phys.org | 3/4/2019 | Staff
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Recent trade wars between the United States and other countries have raised the question: Who pays the price when countries raise tariffs or impose other import duties?

It has been difficult to tease out price effects due to a lack of data. But uniquely available statistics on washing machine production and pricing has provided University of Chicago scholars with a clear answer: When global tariffs were applied to U.S. imports, consumers bore the added cost—with prices jumping more than 10 percent.

Finding - Insights - Manufacturers - Tariffs - Price

The finding, along with insights into how manufacturers evade tariffs and the price effects on complementary goods, is explored in a new Becker Friedman Institute working paper, co-authored by Prof. Ali Hortaçsu and Asst. Prof. Felix Tintelnot of the University of Chicago and Federal Reserve Board economist Aaron Flaaen.

Foreign washing machine production has long vexed U.S. manufacturers. A series of tariffs and import duties were placed on foreign manufacturers of washing machines in recent years as U.S. companies complained about product dumping and other trade infractions. Each time the U.S. would take aim at a particular country, though, manufacturers would quickly move their production facilities to another country and resume business. The...
(Excerpt) Read more at: phys.org
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