PASS-THROUGH OF EXCHANGE-RATES AND TARIFFS IN BRAZIL - UNITED-STATES TOBACCO TRADE

This paper examines the extent to which exchange rate and tariff changes are passed through in U.S. import prices of unmanufactured tobacco from Brazil. The model used considers the possibility of market imperfections in international trade and the potential effects of strategic trade policies. The results indicate that agricultural prices may not be as flexible as commonly thought. Furthermore, exchange rate and tariff changes are not fully passed through to U.S. tobacco import prices, which indicates that firms selling Brazilian tobacco may use trade strategies to maintain or even increase their trade shares in the U.S. tobacco market. © 1990 American Agricultural Economics Association.