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The CEPII Newsletter       
January 2019        

The French edition is slightly different as it also includes material available in French only  

Europe Monnaie & Finance Trade & Globalization Migrations Economic Policy Emerging Economies Competitivness & Growth Environment & Natural Ressources

By how much tariff duties decided by Trump will increase costs and prices in the US economy

To address this question, we identify and quantify three channels: direct taxation, cost increase linked to taxes on intermediate inputs, and altered pricing strategy resulting from strategic complementarities across firms.We reckon that the additional duties enforced up to December 2018 should increase inflation in the US by 0.25% to 0.38%. Should all US imports from China be hit with a 25% tariff, the total inflationary impact would range between 0.66% and 0.99%. Levying 25% additional duties on imports of autos and auto parts would more or less double down this effect, by adding 0.67% to 1.03% to inflation if all providers are targeted, and 0.47% to 0.73% if Canada and Mexico are excluded.
Sébastien Jean & Gianluca Santoni

ISSN: 1255-7072
Editorial Director : Antoine Bouët
Managing Editor : Dominique Pianelli