{
  "title": "Tariff Pass-Through and Import Reallocation",
  "publication": "IMF Working Papers, July 17, 2026",
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  "summary": "We study how U.S. tariff hikes in 2025 have transmitted to import prices. Consistent with recent evidence, we find that duty-exclusive import prices at the variety (country-product) level do not adjust to tariffs, implying full pass-through to duty-inclusive prices at the border.",
  "sections": [
    {
      "heading": "Core findings",
      "content": "- Duty-exclusive import prices at the variety (country-product) level do not adjust to tariffs, implying full pass-through to duty-inclusive prices at the border.\n- At the product level, duty-exclusive aggregate import prices decline significantly with tariff increases.\n- The product-level decline is driven by within-product reallocation toward lower-priced sources—stronger in products facing larger tariff hikes.\n- Reallocation operates primarily through:\n  - Entry of lower-priced varieties.\n  - Exit of higher-priced varieties.\n- Estimates of variety appeal indicate that part of this reallocation reflects shifts toward lower-quality varieties; this quality channel is also present in the 2018–19 U.S.–China tariff episode."
    },
    {
      "heading": "Mechanisms and empirical evidence",
      "content": "- Full pass-through at the variety level: duty-exclusive prices for a given country-product variety do not change with tariff hikes.\n- Aggregate product-level response: despite no variety-level adjustment, the composition of sourcing within products shifts, producing a decline in duty-exclusive aggregate import prices.\n- Composition effects: within-product reallocation is stronger for products facing larger tariff hikes.\n- Quality channel: measured shifts in variety appeal point to movement toward lower-quality varieties as part of the reallocation."
    },
    {
      "heading": "Implications",
      "content": "- Consumer welfare:\n  - Reallocation toward lower-priced and partly lower-quality varieties affects the quality of imported consumer goods.\n- Productivity and inputs:\n  - Quality changes in imported inputs may affect downstream productivity through altered input quality.\n- Historical consistency:\n  - The quality reallocation channel is present both in the 2025 U.S. tariff episode studied and in the 2018–19 U.S.–China tariff episode."
    },
    {
      "heading": "Key statistics and publication identifiers",
      "content": "- Pages: 45\n- Volume: 2026\n- Issue: 149\n- Series: Working Paper No. 2026/149\n- DOI: https://doi.org/10.5089/9798229054171.001\n- Stock No: WPIEA2026149\n- ISBN: 9798229054171\n- ISSN: 1018-5941\n- Authors: JaeBin Ahn, Lorenzo Rotunno, Michele Ruta\n- Date: July 17, 2026\n\nIMF Working Paper: \"Tariff Pass-Through and Import Reallocation\" — JaeBin Ahn, Lorenzo Rotunno, Michele Ruta (July 17, 2026).\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2026/07/17/tariff-pass-through-and-import-reallocation-577819"
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    "Authors: JaeBin Ahn, Lorenzo Rotunno, Michele Ruta",
    "Published: July 17, 2026",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9798229054171.001",
    "Duty-exclusive import prices at the variety (country-product) level do not adjust to tariffs, implying full pass-through to duty-inclusive prices at the border.",
    "At the product level, duty-exclusive aggregate import prices decline significantly with tariff increases.",
    "The product-level decline is driven by within-product reallocation toward lower-priced sources—stronger in products facing larger tariff hikes.",
    "Reallocation operates primarily through:",
    "Estimates of variety appeal indicate that part of this reallocation reflects shifts toward lower-quality varieties; this quality channel is also present in the 2018–19 U.S.–China tariff episode.",
    "Full pass-through at the variety level: duty-exclusive prices for a given country-product variety do not change with tariff hikes.",
    "Aggregate product-level response: despite no variety-level adjustment, the composition of sourcing within products shifts, producing a decline in duty-exclusive aggregate import prices.",
    "Composition effects: within-product reallocation is stronger for products facing larger tariff hikes.",
    "Quality channel: measured shifts in variety appeal point to movement toward lower-quality varieties as part of the reallocation.",
    "Consumer welfare:",
    "Productivity and inputs:",
    "Historical consistency:",
    "Pages: 45",
    "Volume: 2026",
    "Issue: 149",
    "Series: Working Paper No. 2026/149",
    "DOI: https://doi.org/10.5089/9798229054171.001",
    "Stock No: WPIEA2026149",
    "ISBN: 9798229054171",
    "ISSN: 1018-5941",
    "Authors: JaeBin Ahn, Lorenzo Rotunno, Michele Ruta",
    "Date: July 17, 2026",
    "**Working Paper**"
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