On the Incidence of US Tariffs

MUCH attention has been devoted to the study of the structure of tariffs in industrial nations and its impacts on the level and composition of their imports from developing countries. Studies have identified two sources of bias against imports from developing countries inherent in tariff structures of industrial nations. First, tariffs used by industrial nations have been found to bear more heavily on products of export interest to developing countries than on all imports or imports from other industrial nations. Many technologically unsophisticated and unskilled labour-intensive products of export interest to developing countries face relatively high tariffs. The second bias relates to tariff escalation. Industrial nations have been found to escalate their tariff structure according to the fabrication stage of each imported product. Raw materials enter virtually duty free. Higher tariffs are assessed on intermediate products, with even higher tariffs on final products. Tariff escalation is held to pose a barrier against attempts by poorer countries to export goods at the high end of the processing chain. While studies have shown that industrial nation tariffs tend to discriminate against products of export interest to developing countries, they have not given adequate recognition to the disparate manner in which tariffs are applied to the trade of countries that have widely different levels of economic well-being. This paper provides evidence on the differential incidence of tariffs on products of export interest to developing countries by investigating the relationship between per capita incomes of US trading partners and tariff rates. Several features of the present study represent improvements over earlier attempts to identify the inter-country pattern of tariff incidence. First, we assess the incidence of tariffs imposed by the US on imports from countries that span the entire range of per