Citation

Discussion Paper Details

Please find the details for DP15125 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: To What Extent Are Tariffs Offset By Exchange Rates?

Author(s): Olivier Jeanne and Jeongwon Son

Publication Date: August 2020

Keyword(s): Dollar, Exchange Rates, Renminbi and tariffs

Programme Area(s): International Macroeconomics and Finance

Abstract: In theory, we should expect tariffs to be partially offset by a currency appreciation in the tariff-imposing country or by a depreciation in the country on which the tariff is imposed. We find, based on a calibrated model, that the tariffs imposed by the US in 2018-19 should not have had a large impact on the dollar but may have significantly depreciated the renminbi. This prediction is consistent with a high-frequency event analysis looking at the impact of tariff-related news on the dollar and the renminbi. We find that tariffs explained at most one fifth of the dollar effective appreciation but around two thirds of the renminbi effective depreciation observed in 2018-19.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=15125

Bibliographic Reference

Jeanne, O and Son, J. 2020. 'To What Extent Are Tariffs Offset By Exchange Rates?'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=15125