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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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    References listed on IDEAS

    as
    1. Hottman, Colin J. & Monarch, Ryan, 2020. "A matter of taste: Estimating import price inflation across U.S. income groups," Journal of International Economics, Elsevier, vol. 127(C).
    2. David H. Autor & David Dorn & Gordon H. Hanson, 2013. "The China Syndrome: Local Labor Market Effects of Import Competition in the United States," American Economic Review, American Economic Association, vol. 103(6), pages 2121-2168, October.
    3. Michael E. Waugh, 2019. "The Consumption Response to Trade Shocks: Evidence from the US-China Trade War," NBER Working Papers 26353, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Anna Ignatenko & Ahmad Lashkaripour & Luca Macedoni & Ina Simonovska, 2025. "Making America Great Again? The Economic Impacts of Liberation Day Tariffs," NBER Working Papers 33771, National Bureau of Economic Research, Inc.

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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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