SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : The Financial Collapse of 2001 Unwinding
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
Recommended by:
toccodolce
To: Fiscally Conservative who wrote (13393)3/31/2025 9:37:44 AM
From: robert b furman1 Recommendation  Read Replies (1) of 13775
 
Hi FC,

So far our experience with tariffs has been less about inflation and more about currency exchanges.

There have been several studies that support the thesis.

Highlights

  • •
    Tariffs on imports and exports are partially offset by changes in exchange rates.
  • •
    A calibrated model shows that the US-China tariff war should have affected the renminbi more than the dollar.
  • •
    A high-frequency news analysis shows that US tariffs depreciated the renminbi in 2018-19.
  • •
    US tariffs explained two thirds of the renminbi depreciation observed in 2018-19.


Abstract

In theory, tariffs should be partially offset by a currency appreciation in the tariff-imposing country or by a depreciation in the country on which the tariff is imposed. We find, based on a calibrated model, that the tariffs imposed in the 2018-19 US-China tariff war should not have had a large impact on the dollar but may have significantly depreciated the renminbi. This prediction is consistent with a high-frequency event analysis looking at the impact of tariff-related news on the dollar and the renminbi. We find that tariff news explained at most one fifth of the dollar effective appreciation but around two thirds of the renminbi effective depreciation observed in 2018-19.

Introduction
In 2018-19 the US imposed new tariffs of 15.1 percent on average on its imports from China.1 During the same period the renminbi depreciated by 3 percent while the dollar appreciated by 4 percent on a multilateral basis (see Fig. 1). Indeed, a common argument against tariffs is that their effect is likely to be mitigated by endogenous offsetting movements in exchange rates (Stiglitz, 2016). Of course, the appreciation of the dollar and the depreciation of the renminbi could have resulted from factors other than tariffs, such as the US interest rate lift-off and slowing growth in China.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News