IMPACTS ON U.S. PRICES OF REDUCING ORANGE JUICE TARIFFS IN MAJOR WORLD MARKETS

Abstract

A demand model is developed to examine the impacts on orange juice prices resulting from elimination or reduction of the tariffs on orange juice imposed by the United States, European Union, and Japan. An empirical analysis suggests that elimination of the U.S. tariff by itself would decrease the U.S. orange juice price by about $0.22 per gallon, while simultaneous elimination of the U.S., European, and Japanese tariffs would decrease the U.S. price by about$0.13 per gallon. Alternatively, reducing these tariffs according to the Swiss 25 formula would decrease the U.S. price by an estimated $0.09 per gallon. The U.S. produces about 1.4 billion gallons of orange juice annually and each penny reduction in the price impact increases U.S. orange juice FOB revenue by$14 million.Demand and Price Analysis,