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U.S. tariff collection, by trading partner:
Americans bought $1.96 trillion worth of imported goods last year. On this, the Customs Bureau collected $26 billion in tariff money. Overall, therefore, the tariff rate is a low "trade-weighted" average of 1.3 percent. But most of this money -- about $13.5 billion -- comes from a narrow swathe of household goods in which one finds most of America's higher tariffs. These include $9.5 billion on clothes; $1.9 billion on shoes; $1 billion on luggage, purses, and wallets; $0.7 billion on towels, rugs, and linens; $0.7 billion more on sporting goods, plates, glasses, clocks, watches, and silverware. These products total $131 billion in imports, or less than 7 percent of all imports; but they raise nearly 60 percent of tariff money.
One consequence of this odd structure, especially as tariffs are highest on cheap and simple consumer goods, is that the tariff system is the most regressive American tax. Another is that countries which make cheap and simple clothes, shoes, and luggage face a far more restrictive American trade regime than the rest of the world. The average tariff rates on Filipino, Indian, Chinese, and Italian goods -- respectively at 3.7 percent, 3.1 percent, 3.0 percent, and 2.8 percent last year -- are relatively high, reflecting the fact that each has a large clothing-export industry but is also very diversified. Thai goods get 2.2 percent and Brazilian products 1.8 percent; Taiwan gets 1.9 percent, Japan 1.7 percent and Korea 1.6 percent. Germany's 1.4 percent is slightly above the world average, Sweden's 1.1 percent a bit below, and Malaysia's 0.7 percent lower still. Russia, heavy on zero-tariff metals and energy, comes in at 0.3 percent. African Growth and Opportunity Act beneficiary South Africa and energy exporter Saudi Arabia both get 0.1 percent. Thus, except for some isolated and anomalous cases -- Japanese pickup trucks, British Shetland sweaters, Chinese shoes, Dutch cheese, Brazilian orange juice -- most wealthy and middle-income countries rarely encounter high tariffs.
But the U.S. trade system is starkly different for about 15 low-income countries in Asia and the Muslim world specialized in clothing and other high-tariff industries. The main examples are Pakistan, Turkey, Sri Lanka, Laos, Indonesia, Nepal, Mongolia, and above all, Cambodia and Bangladesh. In 2007, Americans bought $2.5 billion worth of Cambodian-made clothes -- mainly cotton pullover shirts, T-shirts, and pants -- sewn by 300,000 young women in 300 factories around Phnom Penh. These goods got a $419 million penalty. In percentage terms this is the highest rate for any American trading partner. Meanwhile, the $57 billion in British goods, led by medicines, airplane parts, artwork, cars, and North Sea crude, faced a $412 million tariff penalty. (And Britain also registered an additional $40 billion or so in services exports not subject to any tariff. The effective tariff rate on Cambodian shirts and skirts thus is 20 times the rate on British (and French) goods; nine times that on Taiwan's consumer electronics and heavy-industry goods; and 160 times the rate on Saudi crude and refined petroleum. Bangladesh's $3.4 billion in clothes (plus some duty-free shrimp) likewise faced a tariff penalty north of half a billion dollars. Pakistan, whose $3.6 billion in exports mix clothes with household linens, gets hit slightly less hard but still faces a penalty nearly as high as France. Together, Cambodia, Bangladesh, and Pakistan supply about 0.4 percent of imports, but account for a nickel in each dollar of America's tariff revenue.
PPI Trade & Global Markets Project Director Ed Gresser's Freedom From Want describes U.S. trade policy and how it got that way. See Chapter 8 for the tariff system, and Chapter 2 for an introduction to one of Cambodia's garment-workers. http://www.amazon.com/Freedom-Want-
American-Liberalism-Economy/dp/1933368624
Friends of the poor, take note of two initiatives:
Cambodia's Ministry of Commerce in 1999 introduced a unique trade-labor linkage program, designed then to win slightly higher quota access to the United States but still in effect today years after the quota system's abolition. Betterfactories.org, an International Labor Organization oversight project, has updates:
http://www.betterfactories.org/newsdet.aspx?z=4
&IdNews=103&c=1
Cambodia's Ministry of Commerce tells its story:
http://www.moc.gov.kh/
How does the United States compare? The WTO publishes 'simple average' tariff rates -- i.e. the sum of all tariffs divided by the number of tariff lines, rather than by the value of imports -- across its members. Singapore, Hong Kong, and Macao, oddly joined by Libya, are lowest at zero tariffs. The Bahamas have the world's highest rate at 30.2 percent, while India's 19.2 percent applied rate seems to be the highest among major economies. The United States comes in at 3.5 percent by this calculation.
http://www.wto.org/english/news_e/news07_e/
tariff_profiles_june07_e.htm
Tariffs and jobs -- Designed first as a tax-collection device, the tariff system today is more often defended as a job-protector. But employment in high-tariff industries is declining rather than growing. The International Trade Commission's 2007 computer-model analysis, Economic Effects of Significant Import Restraints, suggests that the system protects almost no jobs. Simply scrapping it, along with farm quota programs, would shift 60,000 jobs over five years -- not even half the routine 140,000 jobs that turn over every day in the United States. Structural forces cutting the costs of goods and services trade -- larger and faster container ships, better ports, air cargo, the Internet and global telecommunications generally -- seem to be amplifying the power of comparative advantage so strongly as to make the system ineffective. The ITC explains:
http://hotdocs.usitc.gov/docs/pubs/332/pub3906.pdf
