Tariff Incidence: Evidence from U.S. Sugar Duties, 1890-1930

Douglas Irwin

No 20635, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Direct empirical evidence on whether domestic consumers or foreign exporters bear the burden of a country's import duties is scarce. This paper examines the incidence of U.S. sugar duties using a unique set of high-frequency (weekly, and sometimes daily) data on the landed and the duty-inclusive price of raw sugar in New York City from 1890 to 1930, a time when the United States consumed more than 20 percent of world sugar production and was therefore plausibly a "large" country. The results reveal a striking asymmetry: a tariff reduction is immediately passed through to consumer prices with no impact on the import price, whereas about 40 percent of a tariff increase is passed through to consumer prices and 60 percent borne by foreign exporters. The apparent explanation for the asymmetric response is the asymmetric response of demand: imports collapse upon a tariff increase, but do not surge after a tariff reduction.

JEL-codes: F13 F14 N11 N12 (search for similar items in EconPapers)
Date: 2014-10
New Economics Papers: this item is included in nep-his and nep-int
Note: DAE ITI
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