The Effect of Phase-In Tariffs on Import Growth

This paper estimates the causal effect of phase-in tariffs on import growth for the 12 preferential trade agreements (PTAs) signed by the United States since the North American Free Trade Agreement (NAFTA). The phase-in hypothesis from Baier and Bergstrand (2007) implies that products with gradual tariff decreases should experience gradual import growth. Using recently available PTA tariff data, we extend the work of Besedes et al. (2020) and utilize a tripledifference empirical strategy to provide additional evidence that import growth is not consistent with the phase-in hypothesis. We show that phase-in tariffs do not necessarily yield additional import growth relative to already duty-free products. The analysis documents the average effect of phase-in tariffs and country-specific estimates, highlighting the rich heterogeneity in the response of imports. We also consider both the intensive and extensive margins of import changes by explicitly accounting for zero trade flows.