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Did Foreigners Pay America's Tariffs? Quantity Discounts, Scale Economies and Incomplete Pass-Through -- by Sharat Ganapati, Colin J. Hottman
A new academic study using administrative microdata examines who bore the cost of US tariffs imposed in 2018-2019, finding that observed import price increases were partly driven by the loss of transaction-level scale economies as import volumes collapsed. After controlling for this scale effect, the strategic pass-through of tariffs to foreign exporters falls to approximately 60 percent, meaning foreign exporters absorbed a significant portion of the tariff burden through reduced markups. The f