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Perceived Protection: Tariff Spillovers to Product Substitutes in the Used Car Market

Author

Listed:
  • Sebastien Bradley
  • Mian Dai
  • Blaize Giangiulio
  • Yoto V. Yotov

Abstract

We study the spillover effects of the 2025 “Liberation Day” automotive tariffs on the untaxed U.S. used-car market. Using over eight million weekly listings and a VIN-based crosswalk identifying each vehicle’s country of assembly, we document an immediate and persistent 0.2–0.6% increase in the prices of foreign-brand used vehicles relative to domestic-brand vehicles. The effect is concentrated among the newest vehicles — the closest substitutes for new cars — consistent with demand-side substitution. We also find that foreign-brand vehicles produced in the U.S. appreciate as much as those assembled abroad, suggesting that the perceived foreignness of used vehicles may be largely independent of true production location. Neglecting tariff pass-through to untaxed product substitutes understates overall consumer incidence.

Suggested Citation

  • Sebastien Bradley & Mian Dai & Blaize Giangiulio & Yoto V. Yotov, 2026. "Perceived Protection: Tariff Spillovers to Product Substitutes in the Used Car Market," CESifo Working Paper Series 12948, CESifo.
    • Handle: RePEc:ces:ceswps:_12948
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    File URL: https://www.ifo.de/DocDL/cesifo1_wp12948.pdf
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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment

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