A Tarrifying Thought: Imposing Tariffs on U.S. Apparel Imports from China

Using a source-differentiated Almost Ideal Demand System (SDAIDS) model, this paper analyzes U.S. demand for apparel imports and estimates effects of a 15% tariff on clothing imports from China. Our welfare analysis estimated a consumer surplus loss of about $348 million per year. Our findings show that the tariff will reduce Chinese market share across product categories and will likely result in losses in the form of lower prices for Chinese firms. Other Asian apparel exporting countries, especially Vietnam and Bangladesh, are likely beneficiaries of U.S. tariffs on Chinese apparel imports.