Importers Big and Small: The Heterogeneous Impacts of U.S.-China Tariffs on Sourcing and Prices

By Beata Javorcik, Justin Pierce and Emily Wisniewski

This paper studies how importing firms adjust to the 2018-19 U.S. tariffs on Chinese goods. Rather than focusing solely on imports the U.S. continues to source from China, our approach captures changes in unit values and sourcing behavior as heterogeneous importers reallocate purchases across countries. After an initial tariff-driven increase in unit values for all importers, the higher costs persist only for small importers, while prices paid by big importers fall below pre-tariff levels. The more benign adjustment for big importers is driven by lower unit values in arm's-length imports from China and by less costly reallocation to alternative source countries, reflecting their broader supplier networks and more established international operations.