(Joint with Torsten Jaccard and Sebastian Stumpner)
We use detailed data on prices and quantities of barcoded goods to estimate the pass-through of the 2018/19 Trump tariffs into consumer prices. We estimate an average pass-through elasticity of 15% among continuing products. This relatively low rate of pass-through is unlikely to be driven by: i) tariff exemptions, ii) anti-competitive effects, and iii) price-smoothing behavior by producers/retailers. Instead, the likeliest explanations are: i) a low foreign cost share, i.e. a large initial gap between the border price and the retail price for the same item, and ii) elastic consumer demand. Pass-through tends to be higher among products with high market share, and for small retailers. This is inconsistent with predictions from canonical models of oligopolistic competition, whereby larger producers absorb part of the cost increase in their markups, and instead favors recent models of producer-retailer bargaining.