No.870 Tariff Pass-through: The Case of China’s WTO Accession
by Mi DAI
Recent studies on the China–US trade war reveal complete tariff pass-through into import prices for both China and the US. This study provides additional evidence of tariff pass-through in China. Using firm-level monthly trade transaction data, we estimate the tariff pass-through for Chinese imports during the World Trade Organization (WTO) accession period from 2000 to 2006. Consistent with evidence during the trade war, tariff pass-through is also complete for tariff reductions induced by WTO accession. Structural estimates of supply elasticity also imply complete tariff pass-through. These results are robust across ownership types and product end-use. Surprisingly, no correlation exists between tariff pass-through and China’s market share in global imports. Even for products where China accounts for more than 30% of global imports, we still find a complete pass-through of tariffs into import prices.
Keywords: Tariff, Pass-through, WTO accession
JEL classification: F13, F14
Please note that discussion papers are works in various stages of progress and most have not been edited and proofread and may contain errors of fact or judgment. Revised versions of these papers may subsequently appear in more formal publication series. The views expressed in this publication are those of the author(s). The IDE does not guarantee the accuracy of the data included and accepts no responsibility for any consequences arising from its use.