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Effects of the Mexican Apple Tariff on the World Apple Market

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  • Stephen Devadoss
  • William Ridley

Abstract

In response to the USA blocking Mexican trucks from traveling to the inland part of the USA, Mexico imposed tariffs on US fresh apple exports. This study analyzes the impacts of the Mexican tariff on USA, Mexican and world apple markets by using theoretical analysis and developing a spatial equilibrium trade model. The results show that this tariff increases apple prices in Mexico, to the benefit of Mexican producers but harming Mexican consumers. Even though Mexico collects revenues from its tariff, the overall welfare impact is negative because consumers' loss outweighs producers' gain and tariff revenues. Since the USA exports less to Mexico, its prices and production decline, but consumption increases. To mitigate the export market loss to Mexico, the USA redirects its exports to other importing countries, displacing other apple exporting countries' trade with these importing countries.

Suggested Citation

  • Stephen Devadoss & William Ridley, 2014. "Effects of the Mexican Apple Tariff on the World Apple Market," Review of Development Economics, Wiley Blackwell, vol. 18(4), pages 763-777, November.
    • Handle: RePEc:bla:rdevec:v:18:y:2014:i:4:p:763-777
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    File URL: http://hdl.handle.net/10.1111/rode.12117
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    References listed on IDEAS

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    1. James R. Jones & Shuang L. Li & Stephen Devadoss & Charlotte (Jensen) Fedane, 1996. "The Former Soviet Union and the World Wheat Economy," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(4), pages 869-878.
    2. Stephen Devadoss & Amy Hilland & Ron Mittelhammer & John Foltz, 2014. "The effects of the Yuan-dollar exchange rate on agricultural commodity trade between the United States, China, and their competitors," Agricultural Economics, International Association of Agricultural Economists, vol. 45(S1), pages 23-37, November.
    3. Antonio Gomez-Plana & Stephen Devadoss, 2004. "A spatial equilibrium analysis of trade policy reforms on the world wheat market," Applied Economics, Taylor & Francis Journals, vol. 36(15), pages 1643-1648.
    4. Stephen Devadoss, 2013. "Ad valorem tariff and spatial equilibrium models," Applied Economics, Taylor & Francis Journals, vol. 45(23), pages 3378-3386, August.
    5. Shun-Yi Shei & Robert L. Thompson, 1977. "The Impact of Trade Restrictions on Price Stability in the World Wheat Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 59(4), pages 628-638.
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    7. Boya Liu & Stephen Devadoss, 2013. "Effects of trade diversion and trade creation of MERCOSUR on US and world apple markets," Applied Economics, Taylor & Francis Journals, vol. 45(32), pages 4474-4486, November.
    8. Devadoss, Stephen, 2006. "Is There an End to U.S.-Canadian Softwood Lumber Disputes?," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 38(1), pages 1-17, April.
    9. Stephen Devadoss & Thomas Wahl, 2004. "Welfare impacts of Indian apple trade policies," Applied Economics, Taylor & Francis Journals, vol. 36(12), pages 1289-1294.
    10. Jeff Luckstead & Stephen Devadoss & Ron C. Mittelhammer, 2014. "US and Chinese Strategic Trade Policies and Product Differentiation in the ASEAN Apple Market," International Economic Journal, Taylor & Francis Journals, vol. 28(4), pages 613-637, December.
    11. Devadoss, Stephen, 2006. "Is There an End to U.S.–Canadian Softwood Lumber Disputes?," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 38(1), pages 137-153, April.
    12. William Miles & Chu‐Ping C. Vijverberg, 2011. "Mexico's Business Cycles and Synchronization with the USA in the Post‐NAFTA Years," Review of Development Economics, Wiley Blackwell, vol. 15(4), pages 638-650, November.
    13. Stephen Fuller & Luis Fellin & Victoria Salin, 2003. "Effect of liberalized U.S.-Mexico rice trade: A spatial, multiproduct equilibrium analysis," Agribusiness, John Wiley & Sons, Ltd., vol. 19(1), pages 1-17.
    14. William Ridley & Stephen Devadoss, 2014. "US–Brazil Cotton Dispute and the World Cotton Market," The World Economy, Wiley Blackwell, vol. 37(8), pages 1081-1100, August.
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    Cited by:

    1. Vorotnikova, Ekaterina & Devadoss, Stephen, 2016. "The Effects of Panama Canal Expansion on US Dairy Trade Flows: West, East, and Gulf District Regions," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 19(B), pages 1-20, August.
    2. Zhang, Daowei & Nguyen, Ly, 2018. "Tariff and U.S. Paper Products Trade," 2018 Annual Meeting, February 2-6, 2018, Jacksonville, Florida 266771, Southern Agricultural Economics Association.
    3. Devadoss, Stephen & Ridley, William, 2024. "Impacts of the Russian invasion of Ukraine on the global wheat market," World Development, Elsevier, vol. 173(C).

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