The impact of price variability on US imports of homogeneous inputs

•I develop a model of homogeneous input sourcing decisions under price uncertainty.•I estimate the impact of price variability on US imports of homogeneous inputs.•A country's share of US imports decreases in the level and the variance of its price.

In this paper, I quantify the impact of price variability on homogeneous intermediate goods imports. In product-level data, I find a country's share of US imports is decreasing in the level and the variance of its unit price. This finding is consistent with a model of sourcing decisions in which risk averse final-goods firms choose the optimal distribution of intermediate inputs demand across suppliers.