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Working Paper
Trade Deflection: The Spillover Effects of U.S. Tariffs on Import Prices in Bystander Countries
Even as tariffs have reduced U.S. imports from China, Chinese exports have continued to expand globally. Yet despite the relevance of this redirected trade for firms and consumers, globally, there is little systematic evidence on how import prices have responded in "bystander" countries. We show that Chinese products targeted by U.S. tariffs experience persistent declines in import prices in bystander countries, and that these declines are largest in emerging markets. In exploring mechanisms for observed price declines, we show that they are larger for products that China exported heavily to ...