Recently, a collaborative paper by Professor Yu Miaojie (President of Liaoning University), Professor Fan Haichao (Fudan University), Professor Tang Lixin (Jinan University), Associate Professor Tian Wei (Peking University), and Assistant Professor Wu Caiyun (Central University of Finance and Economics), titled “Reconciling Aggregate and Firm-Level Tariff Pass-Through: Evidence from the 2018-2019 US Tariffs on China,” has been officially accepted for publication in The Economic Journal (EJ), a leading international journal in economics.

Abstract:

This paper examines the impact of U.S. tariff increases during the 2018–2019 trade war on the price adjustments and market exit behaviors of Chinese export firms, with a focus on reconciling the coexistence of complete tariff pass-through at the product level and incomplete pass-through at the firm level. Using firm-level customs data from China, the study finds that following U.S. tariff hikes, Chinese exporters significantly reduced their ex-tariff export prices, indicating incomplete tariff pass-through at the firm level. Heterogeneity analysis reveals that high-price firms reduced prices more sharply, while low-price firms showed milder price responses. Meanwhile, U.S. tariffs significantly raised the probability of Chinese firms exiting the U.S. market, with low-price firms exhibiting a stronger exit response. Further decomposition of price changes shows that complete product-level tariff pass-through arises from two offsetting mechanisms: surviving firms absorbing part of the tariff shock by lowering ex-tariff export prices, and the exit of low-price firms raising the average export price of remaining firms. This study provides new empirical evidence on the price effects of trade policy shocks and their micro mechanisms from the perspectives of firm heterogeneity and market selection.

Journal Introduction:

The Economic Journal (EJ), founded in 1891 and published by the Royal Economic Society, is one of the oldest and most prestigious general-interest journals in economics.

Authors Profile:

Yu Miaojie is the Deputy Secretary of the Party Committee and President of Liaoning University. He is a Lifetime Fellow of the Royal Economic Society (FREcon), a Fellow of the International Economic Association (IEA) of the United Nations, a Changjiang Scholar Distinguished Professor, and a recipient of the National Science Fund for Distinguished Young Scholars. He serves as a Deputy to the 14th National People's Congress (NPC), a Special Supervisor of the National Commission of Supervision, and an Associate Editor of *The Economic Journal*, a top-tier international journal in economics. Professor Yu is among the top 1% most highly cited economists in economics and management globally and is, to date, the only Chinese scholar to have received the "Royal Economic Society Prize". He is the Editor-in-Chief of China's Open Economy, a key original textbook in Chinese philosophy and social sciences, and enjoys the State Council Special Government Allowance.

Fan Haichao is a Professor and Doctoral Supervisor at the School of Economics, Fudan University, and serves as the Deputy Director of the Institute of World Economy, Fudan University. He holds a Ph.D. in Economics from the Hong Kong University of Science and Technology. His research areas include theoretical and empirical international trade, as well as the Chinese economy. He has led and presided over national talent programs, emergency projects of the National Natural Science Foundation of China (NSFC), key projects, general projects, and major special projects of the National Social Science Fund of China (NSSFC). Some of his research findings have been featured by the National Bureau of Economic Research (NBER) and have been recognized as ESI Top 1% highly cited papers in the field of Economics and Business. He currently serves as a Co-Editor of Annals of Economics and Finance, an Associate Editor for several journals including Review of International Economics, and a Guest Editor for a number of journals including China Economic Review.

Tang Lixin is a tenured Professor and Doctoral Supervisor at the Institute for Economic and Social Research, Jinan University. She received her Bachelor of Science degree in Economics, Mathematics, and Physics from Bates College, USA, in 2010, where she studied on a full scholarship and graduated Summa Cum Laude, the highest honor. She earned her Ph.D. in Economics from the University of Maryland, College Park, USA, in 2015. Her research areas encompass international economics and development economics, with a primary focus on the impact of tariffs in international trade and the introduction and economic effects of new technologies such as online shopping platforms and industrial robots. Her research has been published in leading domestic and international journals including the Journal of International Economics, Journal of Development Economics, Review of Economic Dynamics, and Management World (in Chinese). She has also served as Principal Investigator for both the Young Scientists Fund and the General Program of the National Natural Science Foundation of China (NSFC).

Tian Wei is a tenured Associate Professor at the School of Economics, Peking University. Her research areas primarily include international economics, development economics, and industrial economics. Her papers have been published in leading domestic and international journals such as The Economic Journal, Journal of Economic Behavior and Organization, Economic Research Journal (in Chinese), Management World (in Chinese), and The World Economy (in Chinese). Her research achievements have received the An Zijie International Trade Research Award, the Outstanding Research Award in Higher Education Institutions from the Ministry of Education of China, and the Liu Shibai Economics Award.

Wu Caiyun is an Assistant Professor at the School of Public Finance and Taxation, Central University of Finance and Economics, and a visiting scholar at the Harvard Kennedy School. Her research areas primarily focus on international tariffs and the Chinese economy. Her research has been published in leading domestic and international journals such as Management World (in Chinese), China Industrial Economics (in Chinese), and Economic Modelling.