A new white paper from the Agricultural Risk Policy Center (ARPC) at North Dakota State University provides evidence on how over-quota (Tier 2) sugar imports have affected U.S. domestic sugar markets.
The report, Quantifying the Price Effects of Over-Quota Sugar Imports on the U.S. Domestic Market (ARPC White Paper 2026–07), authored by Shawn Arita, Ming Wang, and Sandro Steinbach, evaluates price effects and producer revenue impacts using a partial equilibrium model and an econometric stocks-to-use analysis.
The findings show that Tier 2 imports have had a measurable impact on domestic prices. U.S. raw sugar prices were depressed by approximately 5 to 8 cents per pound during FY2025–FY2026, the period when cumulative import inflows generated the largest stock overhang.

A key result of the analysis is the role of tariff erosion. The fixed Tier 2 tariff has lost nearly half of its real value since 2000, making over-quota imports increasingly profitable and contributing to a surge in import volumes. While total import volumes remained relatively stable, Tier 2 imports displaced managed supply from Mexico with arbitrage-driven imports that respond to price differentials. This shift places a ceiling on domestic prices and contributes to the accumulation of excess inventories.

The estimated price effects translate into annual revenue losses of approximately $0.9 to $1.5 billion during FY2025–FY2026. When accounting for stronger price transmission into refined markets, total industry losses are estimated to range from $1.3 to $1.8 billion, with the sugar beet sector bearing a disproportionate share of the impact.

“The key issue is not just how much sugar is imported, but how it is imported. The shift toward arbitrage-driven supply is driving sustained pressure on prices,” said Shawn Arita.

The findings further indicate that current market conditions may persist. Excess inventories accumulated during the FY2021-FY2024 import surge continue to weigh on prices, and recent policy changes have reduced barriers to over-quota imports. Without adjustments to the current tariff structure, similar price pressures are likely to continue.

The ARPC White Paper is available through the Agricultural Risk Policy Center at North Dakota State University: https://tinyurl.com/mw4fnra2

Media Contact:
Agricultural Risk Policy Center (ARPC)
North Dakota State University
arpc@ndsu.edu
https://www.ndsu.edu/agriculture/arpc