Economics Seminar Series with Aaron Flaaen

Dr. Aaron Flaaen is a Principal Economist at the Federal Reserve Board of Governors and an Adjunct Professor at Georgetown University. His research focuses on the intersection of international trade and macroeconomics, with particular attention to topics such as global supply chains and the broader economic impacts of trade. His work contributes to both academic scholarship and policy discussions in the fields of international trade, macroeconomics, and global economic integration.  

Dr. Flaaen will be presenting, "Who Pays for the Tariffs Along the Supply Chain?  Evidence from European Wine Tariffs", joint with Ali Hortascu, Felix Tintelnot, Nicolas Urdaneta, Daniel Xu. 

This paper examines the effects of tariffs along the supply chain using product-level data from a large U.S. wine importer in the context of the 2019-2021 U.S. tariffs on European wines. By combining confidential transaction prices with foreign suppliers and U.S. distributors as well as retail prices, we trace price impacts along the supply chain, from foreign producers to U.S. consumers. Although pass-through at the border was incomplete, our estimates indicate that U.S. consumers paid more than the government collected in tariff revenue, because domestic markups amplified downstream price effects. The dollar margins per bottle for the importer contracted but expanded for distributors/retailers.  Price effects emerge gradually along the chain, taking roughly one year to materialize at the retail level.  Additionally, we find evidence of tariff engineering by the wine industry to avoid duties, leading to composition-driven biases in unit values in standard trade statistics.