U.S. tariffs lower Chinese import prices in third countries
Chinese goods targeted by the 2018–19 U.S. tariffs became 4.4 percent cheaper in third-country markets by 2021 relative to untariffed products, Federal Reserve research finds. Emerging markets recorded the largest and most persistent declines.
Southeast Asia absorbs deeper discounts
Sofie Grouws, Sharon Jeon, Giulia Lo Forte and Justin Pierce use harmonized UN Comtrade data covering over 5,000 product categories across 69 economies in 2017–2021.
Their difference-in-differences estimates compare tariffed and untariffed Chinese goods, controlling for product, origin and destination factors.
By 2021, relative import prices fell 4.8 percent in emerging markets and 2.2 percent in advanced economies.
Association of Southeast Asian Nations (ASEAN) markets recorded declines of around 12 percent in 2020 and 2021.
European Union price effects were statistically distinguishable from zero only in 2019 and 2020.
Third-country import quantities rose 8 percent in 2019 relative to untariffed goods.
The authors replicate earlier findings of no Chinese price reductions in the U.S.
Geopolitics shapes the price map
Geopolitical proximity to China and concentrated import markets best explain differences in price responses when candidate mechanisms are tested jointly.
Geopolitical distance matters within both income groups.
Separate tests also link larger declines to prior reliance on U.S. demand, established Chinese export markets and easier substitution across suppliers; capital intensity has no consistent role.
Price results withstand import-value weighting, alternative tariff-exposure measures, event studies and local projections.
Import discounts are not inflation estimates
The authors identify lower import prices as a potential benefit for consumers and a source of pressure on competing producers.
Their price proxy is average unit value, which also reflects product composition.
They caution that the broader country coverage and different magnitudes of 2025–26 tariffs limit extrapolation.
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