Analysis
The import-price note shows why a lower average border value is not automatically evidence that manufacturers absorbed tariffs. Light vehicles account for about 7 percent of U.S. merchandise imports, and unit values from major suppliers fell 10 percent or more after the April 2025 vehicle tariffs. But model-level data show country-specific mix shifts: Japan moved moderately toward higher-priced models, while South Korea moved toward lower-priced models; South Korea’s electric share fell from 8.9 percent in 2024:Q4 to 0.8 percent in 2026:Q1. The chip-shortage note estimates that U.S. light-vehicle production fell 20 percent below 2020:Q4 levels by 2021:Q3 and accumulated a shortfall exceeding 2 million units in 2021–22. Automakers protected output by allocating chips toward higher-margin vehicles and deleting features; the authors estimate those deletions may have prevented another 100,000 to 200,000 lost vehicles. For lenders and merchants, both notes point to mix-adjusted affordability and collateral analysis rather than relying on aggregate price or production measures alone.
What remains uncertain
These are Federal Reserve staff research notes, not Board policy. MSRP-based measures do not equal border transaction prices, and the chip-exposure estimates rely on imperfect mappings between semiconductor content, equipment and production. The South Korean mix change also reflects regulatory and domestic-production shifts beyond tariffs.
Sources
- Federal Reserve — Beyond Face Value ↗Official source
- Federal Reserve — When the Chips Went Down ↗Official source