A Case Study of Avocado, Berry, and Apple Trade through NAFTA

Abstract

A Source-Differentiated Almost Ideal Demand System (SDAIDS) model was estimated for berries, apples, and avocadoes imported through NAFTA prior to the new USMCA. Elasticity estimates are useful for measuring consumers’ responsiveness to changes in fresh-fruit prices or expenditures. This study found the demands for berries, apples, and avocadoes were price inelastic; and that cases of substitute fresh-fruit imports were more frequent than complements. The study also assessed expected changes in US fresh-fruit imports through NAFTA in the wake of a tariff on Mexican fresh fruits as frequently propagated by politicians in the news. The combined direct and indirect impacts from the imposition of a 20% tariff on berries imported from Mexico suggested that US monthly expenditures on berries, apples, and avocadoes would increase by $6.25 million and the tariff revenue would be close to $10 million.