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More Tariffs On China, More Head Scratching From Economists | WAMU

A Cycle That Won’t Leave You Feeling Cleaner
In early 2018, after the American company Whirlpool complained about foreign competition, the Trump administration implemented tariffs on washing machines imported from all over the world. It’s a 20% tariff on the first 1.2 million washing machines sold a year and a 50% tariff on every one after that.

While these tariffs were imposed on foreign manufacturers, the study by Flaaen, Hortaçsu, and Tintelnot, like study after study before it, finds it’s ultimately U.S. consumers who pay. New washing machines in America got about 12% more expensive. That’s not too surprising.

What is surprising is that dryers also got more expensive even though they weren’t subject to the tariff. That’s because washers and dryers are in econospeak “complementary goods.” They are more valuable together and are typically bought at the same time. “Before the tariffs, most manufacturers were pricing paired washer and dryer models at the exact same sticker price,” Felix Tintelnot, a co-author of the study, says. “This pricing strategy was maintained after the tariffs… so the full effect of tariffs on prices is only visible after factoring in the price of the complementary good – dryers.”

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More Tariffs On China, More Head Scratching From Economists | WAMU.

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