Quantifying the Price Effects of Over-Quota Sugar Imports on the U.S. Domestic Market

➩ The tariff protection has eroded. The Tier 2 tariff of 15.36 cents/lb has lost approximately 49% of its real value to inflation since 2000. Tier 2 imports rose from roughly 10,000 STRV per year before FY2018 to a record 1,231,000 STRV in FY2024, a more than 700% increase in five-year averages.

➩ The Needs Formula can no longer maintain its target. The Suspension Agreement formula targets a 13.5% ending stocks-to-use ratio by adjusting Mexico’s import allocation, reduced by projected Tier 2 imports. As Tier 2 grew, the formula compressed Mexico’s share to near zero, and excess supply accumulated above the policy target.

➩ Revenue losses to domestic producers are substantial. The central estimate, anchored to the ICE No. 16 raw sugar benchmark, is an annual revenue loss of $0.9 to $1.5 billion. A refined-adjusted estimate that applies amplified raw-to-refined pass-through to both the beet and cane segments implies an industry-wide loss of $1.3 to $1.8 billion, with the sugar beet segment absorbing the majority.

➩ The stock overhang is attributable to Tier 2 imports. A stock-adjusted dynamic extension decomposes the total price effect into a within-year flow component and an across-year stock-accumulation component. By FY2025–FY2026, the stock component explains most of the price depression, indicating that current excess inventories reflect cumulative Tier 2 inflows from FY2021–FY2024.

➩ Conditions support continued Tier 2 pressure. The Supreme Court’s February 2026 invalidation of IEEPA tariff authority removed the overlay that had partially suppressed Tier 2 flows. The Section 122 replacement, 10% ad valorem, expires in July 2026. After that date, the only barrier to over-quota imports is the 15.36-cent rate already in effect during FY2024. Absent a tariff adjustment, the estimated price effects would be expected to persist.

Recommended Citation Format: Shawn Arita, Ming Wang, and Sandro Steinbach (2026). Quantifying the Price Effects of Over-Quota Sugar Imports on the U.S. Domestic Market. ARPC White Paper 2026–07. Agricultural Risk Policy Center, North Dakota State University. https://doi.org/10.22004/ag.econ.397832