Retaliatory Tariffs of China during the Trade War: A Firm-level Overview

Abstract In this paper, we offer a comprehensive survey of the latest research regarding the pass-through of tariffs during the trade war between China and the United States, with an emphasis on the investigations conducted from the Chinese perspective. While one might anticipate symmetric effects on both the United States and China, these nations exhibit substantial disparities in terms of trade structure and policy. We underscore two salient concerns that have been largely neglected in extant literature: (1) the exemption of processing imports from retaliatory tariffs in China, which may engender biased estimations of pass-through at the product level, and (2) the heterogeneous distribution of retaliatory tariffs across product classifications, firm ownership structures, and geographical regions, necessitating more granular estimations at the firm level. Furthermore, we provide a detailed description of firm import tariffs, emphasizing the crucial role of tailored policies in mitigating the repercussions of the trade conflict.