How a Passive Depreciation of U.S. Specific Tariffs May Affect Imports

Analysis of tariff and trade data at the HTS8 level shows that specific tariff rates have remained constant while the median import price of such products has nearly doubled, leading to a passive depreciation of specific tariffs relative to the value of imported goods. In this paper, I use a partial equilibrium model to quantify the effects of this passive depreciation, representing the interaction between specific tariffs and import prices in the model as a decrease in ad valorem tariff parameters. I evaluate the model for around half of HTS8 products subject to specific tariffs; these products largely belong to the agricultural or food manufacturing sectors but also include non–food sectors such as chemicals and apparel. Results show that this decrease in ad valorem tariff equivalents causes imports for most products to increase by under half a percent compared to a baseline scenario in which AVEs are held constant. Sector–wide effects of this decrease in ad valorem tariffs are negligible. However, counterfactual import changes display considerable heterogeneity, with imports of some products increasing by more than ten percent.