5. One important lesson from our study: Even if the retail price rises by less than the tariff rate, consumers can still end up covering the entire tariff in dollar terms.
21.10.2025 14:11
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5. One important lesson from our study: Even if the retail price rises by less than the tariff rate, consumers can still end up covering the entire tariff in dollar terms.
4. A ~7% rise in consumer prices on a 25% tariff may seem like incomplete pass-through. Yet, the retail price is much higher than the importer's purchase price on which tariffs were assessed and we cannot rule out that consumers paid the full amount of the extra tariff revenue.
3. In response to a 25% tariff, exporters cut prices by about 5%, the importer absorbed much of the cost, raising wholesale prices only ~5%. Consumer prices rose by ~7%, showing full pass-through from wholesale to retail.
2. Using confidential data from a large U.S. wine importer during the 2019–2021 tariffs on European wines, we tracked how much the foreign exporter received, how much U.S. wholesalers paid to the importer, and what consumers paid at retail.
Who pays for tariffs? It’s a simple question that’s surprisingly tough to answer. We often see only a rough aggregate measure of prices at the border or the retail price, missing many steps in the chain.
We tackle this in a new paper w Aaron Flaaen, Ali Hortacsu, Felix Tintelnot and Daniel Xu
📢New @nber.org WP with @ayllonsara.bsky.social, Lars Lefgren, @richpatterson.bsky.social & Nicolas Urdaneta!
We would love any feedback if you have a chance to take a look. Full paper here: nber.org/papers/w33911
Hi! Could you please add me too?
Because employment data address the bias against the smallest productive units that characterize firm-level datasets, our approach uniquely assesses and highlights the dominance of the left tail of the business size distribution in less developed countries.
We also find a close negative business size-Gini relationship and a closer connection between individual income and business size for workers in less developed countries compared with those in advanced economies.
Using official employment surveys for 45 advanced economies and Latin American countries, we show that the positive cross-country correlation between business size and GDP per capita is tighter than previously found using firm-level datasets.
Business Size, Development, and Inequality in Latin America: A Tale of One Tail My latest work with Marcela Eslava, Marcela Meléndez, and Laura Tenjo is out as a WB Working Paper. documents.worldbank.org/en/publicati...