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Exchange rate offset to US trade policy: The pricing response of Chinese exporters

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  • Khalil, Makram
  • Strobel, Felix

Abstract

The US trade conflict with China in 2018 and 2019 was accompanied by a marked appreciation of the US dollar. We provide evidence that Chinese exporters notably lower their prices in response to a USD appreciation. Our results thus suggest that the effect of the 2018–19 US tariff hikes on US (post-tariff) import prices was largely offset by a price reduction by Chinese exporters. This holds particularly for prices of intermediate goods, which make up a large share of Chinese exports to the US. To the extent that US trade policy was itself the driver of the USD appreciation, it induced significant offsetting effect.

Suggested Citation

  • Khalil, Makram & Strobel, Felix, 2025. "Exchange rate offset to US trade policy: The pricing response of Chinese exporters," Economics Letters, Elsevier, vol. 256(C).
    • Handle: RePEc:eee:ecolet:v:256:y:2025:i:c:s0165176525004331
    DOI: 10.1016/j.econlet.2025.112596
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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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