Tariff Pass‐Through and Welfare in the Tablet Computer Market*

<p>This paper estimates short-run effects of tariffs on United States tablet prices and welfare. Market data are used to estimate a model of demand and supply and to simulate prices and sales in scenarios with tariffs. A 25 per cent tariff on firms assembling in China results in tariff elasticity of tablet prices for taxed firms of 1.108, a 29.6 per cent decline in profits, and a deadweight loss of 28.8 per cent. Firms assembling elsewhere benefit from the reduction in rivals’ competitiveness. Long-run implications are that firms may decide to shift production from ‘uncompetitive’ facilities in China to countries that are politically favored.</p>