Inventory, Sourcing, and the Effects of Trade Costs: Theory and Empirical Evidence

Falling tariffs: implications of globalization-induced tariff reductions on firms, workers, and tax revenues

“…This implies that, as import costs increase, firms build up inventories (or unsold/unfinished products) when inputs cost more. This is consistent with the findings of Muris et al (2023) for the US steel sector. The opposite is true for the relationship to final goods tariffs, which is positive for manufacturing firms.…”