Tariffs and the Textile Trade between Brazil and Britain (1810-1860)

The 1810 commercial treaty with Britain is among the most important institutional changes of nineteenth century Brazil. It lowered tariffs for British manufactures while maintaining high tariffs in Britain for sugar and coffee from Brazil. The terms of the treaty have generally been condemned as negative for the Brazilian economy, but there is still limited quantitative information about how much the tariff impacted the demand for British products. Using new archival evidence, this paper provides information about the effective tariff rate on British imports and examines its impact on textile trade. It finds that the Brazilian government set the effective tariff rate above the 15% rate established by the commercial treaty because it tried to increase revenues by overvaluing British products at custom-houses. The higher rates, however, do not appear to have had an impact on demand for British textiles because changes in the exchange rates and the continuous fall in import prices explain most of the variation in the real cost of imports.