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Tariffs Tax the Poor More: Evidence from Household Consumption During the US-China Trade War

Author

Listed:
  • Hong Ma
  • Luca Macedoni
  • Jingxin Ning
  • Mingzhi (Jimmy) Xu

Abstract

Using disaggregated US household expenditure data, we study the distributional consequences of the US-China trade war. We estimate a highly flexible demand system to compute household-specific price indexes. The increases in US tariffs on Chinese products between 2018 and 2019 led to an average price index increase of 1.09%, with a disproportionately larger impact on low-income households. Specifically, we document a 0.9 percentage point smaller increase in the household price index for the top 20% income households compared to the bottom 20%. The dif-ference stems from wealthier households’ greater expenditure adjustments and smaller reductions in product variety.

Suggested Citation

  • Hong Ma & Luca Macedoni & Jingxin Ning & Mingzhi (Jimmy) Xu, 2025. "Tariffs Tax the Poor More: Evidence from Household Consumption During the US-China Trade War," CESifo Working Paper Series 11610, CESifo.
    • Handle: RePEc:ces:ceswps:_11610
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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp11610.pdf
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    More about this item

    Keywords

    US-China trade war; tariffs; income inequality; distributional effects of tariffs; household consumption;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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