What is the proportion of tariff increases passed through into domestic price increases for steel, in the wake of the Section 232 actions. Some of the oft cited estimates pertain to early on in the trade war. With the benefit of additional data, we have more evidence confirming that — unlike the tariffs imposed on most other goods — pass through is less for steel.
This point is made in a recent working paper by Ahmad and Ahmad (2022); from the abstract:
Recent studies report that the overall burden of tariffs has entirely passed to U.S. firms and consumers in terms of higher import prices. However, using 10-digits import data from U.S. Customs for 2018-2019, we find that import prices of steel products behaved differently: First, foreign exporters have gradually decreased their prices, sharing almost 50 percent of the burden of increased tariffs for all steel products mostly determined by industrial supplies and materials. Second, the price and import elasticities for consumer steel products are substantially higher at 5 and – 8, respectively. Third, the immediate increase in prices of industrial supplies was near 100 percent, which decreased to slightly below 50 percent in the long run. The elasticity of imports increased over time to near 1 in the long run.
The analysis is an event-study using U.S. Customs department HTS10 digit and country-level information on monthly import values and volumes, further categorised by end- use categories i.e, capital, consumer, and industrial supplied and materials (delta parameters in equation 1)
The estimates of the elasticity for each category of steel is shown in Figure 2 from the paper.
Source: Ahmad and Ahmad (2022).
So, unlike the behavior of import prices in the wake of the Trump (Section 232 and Section 301) tariffs, steel prices have exhibited less than full pass-through (echoing Amiti et al (2020), noted in my previous post).