Since the reform and opening up, China has greatly reduced tariff and non-tariff barriers to facilitate massive imports of foreign goods, enriching the varieties of domestic goods, while strengthening the market competition for congener commodity at home. However, the relationship between tariff reduction and domestic consumer market pricing is still a blank due to the lack of micro retail prices at present. In addition, the rapid development of real estate has become a hot topic in China, and its impact on the domestic economy is also the focus of the policy-maker, but due to the lack of theory and data, little literature deeply analyzes how housing prices influence the consumer market from the perspective of micro prices. So will the competitive function of tariff reduction on domestic consumer prices be affected by local housing prices? Is there a difference between commodities?

This paper explains how the rise of housing prices affects the final pricing of domestic goods through the markup of retailers during trade openness. Empirically, it estimates the inhibition of housing prices on tariff transmission based on 75 kinds of consumer goods in 136 cities from 2001 to 2012 by matching retail price database from China Price Information Center and custom data as well as prefecture-level housing prices. In order to prove the robustness of the basic results, this paper examines the relationship between tariffs, housing prices and domestic consumer prices through non-parametric estimation, sample re-selection, regional grouping and market liberalization grouping. It comes to the following conclusions: Firstly, import tariffs will lower domestic retail prices via competition, but retailers with higher pricing ability in regions with higher housing prices will reduce the price less because demand elasticity is relatively lower, which indicates that the rise of housing prices will block the tariff transmission mechanism. Secondly, the results of non-parametric estimation show that: the tariff transmission in regions with high housing prices is always lower than that in regions with low housing prices, and with the continuous decline of tariffs, the marginal effect of rising housing prices on tariff transmission is weakened. Besides, trade openness contributes to the substantial decline of domestic commodity prices even at the same housing price. Thirdly, compared with the necessities of life and homogeneous commodities, the barrier effect of rising house prices on the tariff transmission of general consumer goods and heterogeneous goods is more significant.

In short, this paper mainly expands the existing research from the following three aspects: Firstly, by matching the data of import tariffs, market retail prices and urban housing prices, the microscopic information at the level of " commodity-tariff-retail price” is finally obtained to accurately describe the tariff transmission process and detailed mechanism for the first time. Secondly, based on the perspective of trade openness, this paper directly explores the impact of housing prices on consumer commodity prices, and analyzes the influence mechanism between housing prices and consumer commodity prices from a micro perspective. Thirdly, based on housing prices, this paper accurately and intuitively studies the differential impact of tariff reduction on domestic retail prices, which enriches the research on the urban heterogeneity of trade openness on the domestic consumer market.