TARIFF ESCALATION: IMPACTS ON U.S. AND GLOBAL RICE TRADE

Tariff escalation is an important aspect of protection for domestic milling industries, particularly in Central America. The United States exports over 40 percent of its rice as paddy. This study uses a spatial equilibrium trade model to evaluate the impacts of tariff escalation on U.S. and global long grain paddy and milled rice trade. Tariffs are harmonized for paddy and milled rice at two levels: milled tariff rates and zero. The results indicate that tariff escalation distorts US rice trade in favor of paddy exports, reducing the demand for rice milling and associated value-added activities in the US.