Is the U.S. Import Tariff on Brazilian Ethanol Justifiable?

Stephen Devadoss and Martin Kuffel

Journal of Agricultural and Resource Economics, 2010, vol. 35, issue 3, 13

Abstract: The United States has used tax credits and mandates to promote ethanol production. To offset the tax credits received by imported ethanol, the United States instituted an import tariff. This study provides insights about the quantitative nature of a U.S. trade policy that would establish a free-market price for ethanol, given the U.S. ethanol mandate and tax credit. The theoretical results from a horizontally related ethanol-gasoline partial equilibrium model show that the United States should provide an import subsidy rather than impose a tariff. The empirical results quantify that this import subsidy is 9 cents, instead of a 57 cent import tariff, per gallon of ethanol.

Keywords: International Relations/Trade; Resource/Energy Economics and Policy (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:jlaare:99107

DOI: 10.22004/ag.econ.99107

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