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U.S. tariff on $2.28 pair of sneakers: $1.09
U.S. excise tax on $2.28 pack of cigarettes: $0.39
Americans bought about 2.4 billion pairs of shoes last year. The vast majority of them (2.37 billion out of the 2.4 billion, or almost 99 percent) come from overseas; America's 16,000 shoe-industry jobs are almost all in design, research, marketing, or specialized production of sophisticated gear for workers in hazardous jobs, rather than mass-market shoe production. But shoe tariffs have been untouched since the 1950s, and shoes still get the highest tariff rates the United States applies to any manufactured goods.
Shoe tariffs begin at 8.5 percent for leather dress shoes. They then rise to 20 percent for running shoes and peak at the 37.5 percent, 48 percent, and 60 percent rates imposed on grades of cheap sneakers last made in the United States in the early 1970s. Two ways to look at the consequences:
- For a lower-income family: Tariffs inflate the cost of the cheapest shoes by about a third. A $2.28 pair of sneakers arriving at the border gets a 48 percent tax, or $1.09, which is then passed along to shoppers, magnified by retail markups and state sales taxes. The $1.09 border tax is roughly three times the 39-cent federal tax on a $2.28 pack of cigarettes, four times the national gas tax, and twice the $13.50-per-gallon tax on whiskey, vodka, and other spirits.
- For consumers generally: Altogether, the tariff system raises shoe costs by about a tenth. Shoes account for a penny in each dollar of imports, but raise $2 billion out of $25 billion in annual tariff tax revenue, or about eight cents in each dollar. After markups and sales taxes, they account for four to five billion of the $55 billion Americans spent on shoes last year.
If you wish to understand a poor family's life, says the familiar proverb, walk a mile in their shoes. Then make the next pair easier to afford. Rep. Joe Crowley (D-NY) asks the appropriate question: "Why should a mom pay 30 percent more for her child's shoes because of tariffs?"
Crowley, joined by Reps. Nancy Boyda (D-KS) and Kevin Brady (R-TX), proposes scrapping shoe tariffs. Crowley explains the Affordable Footwear Initiative:
http://crowley.house.gov/news/record.asp?id=1007
"Taxes, Tariffs and the Single Mom" -- Shoes are the extreme case, but not a freakish exception to the general rule. Most tariff money comes not from cars, steel, semiconductors, oil, and other very large-scale imports but from shoes, clothes, luggage, household linens, and a few other family goods. PPI explains why the tariff system, unsuccessful as a job protector, is nonetheless quite good at reducing living standards for poor families:
http://www.ppionline.org/ppi_ci.cfm?knlgAreaID=108
&subsecID=900010&contentID=250828
International perspective -- On average, U.S. tariffs are quite low. The $25 billion in tariff revenue, divided by $1.9 trillion in imports, means an average rate of 1.4 percent -- roughly the same and often a bit lower than the figures for other rich countries, and well below the developing-country levels. But the U.S. shoe tariffs are among the highest anywhere in the world. The EU's tariff on sneakers is 17 percent, China's is 24.5 percent, Malaysia's 25 percent, Ghana's 20 percent, Chile's 6 percent, and Japan's 10 percent. The Commerce Department has a list of 97 foreign tariff systems (Check section 640411 to compare sneaker rates):
http://www.export.gov/logistics/country_tariff_info.asp
The U.S. International Trade Commission keeps America's tariff schedule. Shoe tariffs come under Chapter 64, sneakers under section 640411:
http://www.usitc.gov/tata/hts/bychapter/index.htm
