Quantifying the Effects of Mexico's Retaliatory Tariffs on Selected U.S. Agricultural Exports

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Abstract

This article estimates the trade-reducing effects of the retaliatory import tariffs imposed by Mexico on selected U.S. agricultural products from March 2009 to October 2011 as part of the U.S.-Mexico trucking dispute. Using an autoregressive distributed-lag time series model of the targeted agricultural exports, we find that the tariffs reduced U.S. sales of these products to Mexico by $984 million (22%). We find no evidence that reduced exports to Mexico were offset by increased sales of these same goods to other countries. The large impact of the tariffs underscores the importance of the duty-free provisions of the North American Free Trade Agreement, as well as the potentially high costs of retaliatory trade measures.

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