November 24
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Tariffs Make U.S. Fat

Tariffs Make U.S. Fat

June 22, 2023
 
In the spirit of “good, old-fashioned econ content,” Alex Tabarrok discusses why Americans are the world’s biggest high-fructose corn syrup producers. I loved seeing this because I’ve been using the HFCS-sugar tradeoff example in Econ 101 since I started teaching.
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American sugar tariffs and other restrictions mean that the price of sugar in the U.S. hovers at roughly twice what it is worldwide:
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If the only sugar buyers were ordinary consumers buying a bag every year or so, perhaps the cutback would be marginal. After all, proportion of budget is a determinant of elasticity. But sugar or sugar substitutes are found in thousands of food items:
“Some of those products are more obvious sugary foods, but not all. The list includes many sauces, soups, fruit juices and even meat products. You might think it’s easy to figure out whether the food manufacturer added sugar to your food, but it isn’t always so. While some foods include “sugar” in their ingredients, many use different words for products that are nutritionally similar. Most of us have heard of high-fructose corn syrup, a sugar made from processing corn. But there are also things like the “evaporated cane juice” in the yogurt, and “rice syrup” and “flo-malt,” which are less obvious and amount to the same thing.”
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A large industrial producer of foodstuffs will find it worthwhile to shift from sugar—when it becomes a few cents costlier—into something like high fructose corn syrup. It’s not uncommon for American visitors to Europe and/or South America to report that the food during their trip tasted better compared to what they typically eat. It’s not merely the halo effect of being on vacation. It’s that natural cane sugar, which producers in these countries are more likely to use, tastes better. In their fascinating The New World of Economics, Richard McKenzie and Gordon Tullock tackle the economics of obesity, but the sugar restrictions must be a major contributor. This cries out for more empirical research—what fraction of American obesity stems from sugar restrictions?