Price Effects of US–China Trade Wars

This paper examines the short-run price effects of US tariffs during the Trump administrations. Using a monthly industry-level event-study with staggered treatment timing, we estimate their impacts on domestic producer price inflation across two trade war episodes over 2018–2019 and 2024–2025. The results show that tariffs increased inflation in both episodes, but the magnitude and persistence differed. In 2018–2019, tariffs led to large and sustained price increases, driven by strong cost pass-through from imported intermediate inputs from China. In contrast, in 2024–2025, despite more aggressive tariff measures, inflationary effects were not proportionally larger and dissipated more quickly. This attenuation reflects global supply chain reallocation following the first US–China trade war and the COVID-19 pandemic, as US firms diversified away from Chinese inputs, weakening input-cost transmission.