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Showing posts from August, 2019

Who is paying for the Tariffs? China or the US Consumer?

Who is paying for the Tariffs? China or the US Consumer? We present a counterfactual (i.e., what might have been  if the tariffs were not in place) analysis of the impact of tariffs imposed on China by the Trump administration, starting in February 2018. If you want to skip straight to the results, scroll down to the charts and the green curve towards the end represents the estimated price of the goods in the absence of tariffs. The maximum percentage difference between our estimate and the actual price is also marked in the charts. Brief background of the Synthetic Control Method The analysis is done using the Synthetic Controls method pioneered by Abadie et. al., and which I have recently started extending with colleagues at MIT. A more detailed explanation of the technique can be found here , but the basic idea is to analyze the impact of a "treatment unit" by creating a synthetic version of the treatment unit using a combination of untreated units, and t