IMF working paper finds US import prices inclusive of duties rise one-to-one with tariff increases, while exporters’ prices respond little.
Its estimates suggest an 8 percentage point rise in effective US tariffs implies an average import decline of about 3.6 per cent.
For sourcing teams, it highlights tariff-driven reallocation across trading partners and examines import-quality effects.
The International Monetary Fund (IMF) working paper, Tariff Pass-Through and Import Reallocation, WP/26/149, July 2026, says tariff incidence depends on mechanisms including border pass-through, market structure and pricing behaviour along global value chains, and the reallocation of trade flows across foreign and domestic suppliers.
The paper uses monthly US Census data on imports and collected duties, reporting import values and quantities by country of origin and HS 10-digit product. It measures variety-level prices using unit values excluding collected duties and including duties, on a free on board basis, and defines the effective tariff rate as collected duties divided by import values.
Its baseline specification regresses year-on-year monthly changes in US import prices, values and quantities on changes in US import tariffs over the period from February 2025, when the US administration began materially revising tariff policy, through December 2025. The study uses year-on-year differencing to remove seasonality and monthly tariff variation to capture high-frequency policy changes, including tariff increases and decreases.
The preferred estimates use a two-stage least squares approach that instruments effective tariff rates with statutory US tariffs. Statutory tariff data are drawn from the World Trade Organization-IMF Tariff Tracker at the HS 8-digit level, the paper said.
For product-level analysis, the paper combines effects on exporters’ prices with shifts in sourcing across origin countries for a given product. It says product-level pass-through captures within-variety price responses as well as changes in import composition across varieties, making it relevant for domestic inflation.
The paper also examines how import reallocation affects the quality of US imports, describing quality as a key element for assessing welfare and productivity implications.
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