Last night's "news" brought triumphant squawks from the Coiffed Ones that 'US consumers are paying the cost of tariffs according to a [Kiel] study.'
Well, that 'study' has major flaws which the Coiffed Ones will not mention.
...Their key finding is a coefficient of −0.039, with a standard error of 0.024, significant only at the 10 percent level. For non-statisticians: this means the estimate is quite noisy. With 25.6 million observations in their dataset, achieving only marginal statistical significance suggests enormous underlying variation in the data. ...
...The deeper flaw lies in what happens when tariffs reduce imports, which is exactly what the study says occurred. The authors report import values and volumes fell by roughly 28-33 percent. This is where their methodology breaks down....
That's because exporters stopped selling the low-priced goods. Why? Because they could not take the hit to margins required by both maintaining their low price AND paying the tariffs.
Finally:
...the Kiel data only goes to HS6, a much broader category that might simply be “frozen beef.” In short, they are measuring tariffs with a ruler and prices with a yardstick.
This means when the authors assign a tariff rate to their data, they’re using an average across products that actually face quite different tariffs. Some sub-products within “frozen beef” might face 50 percent tariffs while others face 10 percent. The mismatch means their tariff variable is measured with error.
The consequence is predictable: when your key independent variable is noisy, statistical results get biased toward finding no effect. And “no effect” of tariffs on unit values is exactly what the authors interpret as “full pass-through to Americans.” ...
So are YOU paying the tariffs?
Not nearly as much as the Coiffed Ones want you to believe. Not even close.
4 comments:
I've bought American in the last several years as much as possible. I can tell you the imported stuff I buy regularly hasn't changed much in price in the last year.
This is great. For years when people said that if we raised taxes on these companies they would pass it on to the consumers, so that was a lie??
US steel production surpasses Japan for first time since 1999 amid tariffs
https://www.justthenews.com/nation/economy/us-steel-production-surpasses-japan-first-time-1999-amid-tariffs
…..U.S. crude steel output increased to 3.1% in 2025, to 82 million tons, according to the World Steel Association, putting the country in third place globally, behind China and India…..
Century Aluminum to Construct 1st US Aluminum Plant in More Than 40 Years
https://www.theepochtimes.com/business/century-aluminum-to-construct-1st-us-aluminum-plant-in-more-than-40-years-5976954
“The new plant, to be built in Inola, Oklahoma, as previously announced by EGA, is expected to produce 750,000 tonnes of aluminum per year, larger than previously envisioned and more than doubling current U.S. production. The Inola plant will create 1,000 permanent direct jobs at the facility and 4,000 jobs during construction,” Century stated.
“About 85 percent of the aluminum needs of American industries are currently met by imports. The new smelter will expand the domestic supply of this critical mineral and grow the American aluminum workforce, revitalizing U.S. aluminum expertise and know-how.”
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