Tariffs and Consumer Prices: Insights from Newly Matched Consumption-Trade Micro Data

We evaluate the impact of various US tariff scenarios on consumer prices using novel micro-level data linking imports to consumer expenditures. Results indicate that an additional 10 percent tariff on Chinese imports, 25 percent tariffs on Canadian and Mexican imports, and 10 percent tariff on other countries could raise consumer prices on everyday retail purchases, such as food and beverage items and general merchandise, covering about a quarter of the total consumption basket, by 0.81 percent to 1.63 percent, assuming half to full pass-through. Notably, tariffs on Canada and Mexico contribute approximately 45 percent of the total price effect. Our results focus on direct effects of tariffs on a quarter of the total consumption basket, and the aggregate effect on the overall Consumer Price Index (CPI) further hinges on the price sensitivity of the excluded consumption categories, particularly transportation, services, energy, and housing.