Most empirical work on the previous trade war, and the ongoing, suggests tariff pass through for the United States is near 100%. One caveat – foreign firms might not have viewed the January 2025 peak in the dollar as durable, so looking at where exchange rates are now relative to say October of 2024 might be more reasonable. However, more significantly, tariff rates only started rising about April-May, reaching near current rates in October; hence one can expect prices to continue to rise due to the tariffs and domestic firms passing on the price increases.
Author: Menzie Chinn
Published at: 2026-02-01 21:51:42
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