13 Tariffs and Shoes

Tariffs are taxes on imports.  The usual argument for implementing a tariff is to help save a domestic industry from “unfair” competition and save American jobs.  The usual argument against tariffs include the fact the domestic consumers end up paying higher prices.  The general economic analysis provides that the vast number of consumers total lost value is greater than the gain of domestic producers.  Therefore, tariffs are a net loss.  Are they?

When you think of tariffs you probably don’t think of athletic shoes.  Foreign Athletic shoe producers are assessed some of highest tariffs to access the U.S. market.  The American Nike Manufacture who uses off shore production states that “…the suggested retail price for a pair of Air Jordan cushioned track shoes sold for $150 includes a 20 percent tariff (Ahmad)”.

The shoe tariffs were initial put in place with the approval of the Smoot-Hawley Tariff Act of 1930.  At that time there was a larger American footwear industry, however today, more than ninety nine percent of shoes are imported (Cato).  The last American athletic footwear company that manufactures and assembles on a relatively large scale in the United States is New Balance.  However, New Balance domestically manufactures 30% of the product line and imports 70%.

Those that wish to remove the trade barrier argue that the taxes are regressive as the average tariff on shoes is 13% whereas the average is 1.3% for all consumer goods (FDRA).  Lower income consumers end up paying a higher percentage of their income to purchase a necessary item…shoes.

Men’s Leather dress shoes   8.5% Tariff rate

Running Shoes                         20% Tariff rate

Ankle Boots                              48% Tariff rate

Shoes valued at $3 or less     48% Tariff rate

Source:  U.S. International Trade Commission Tariff Database (Cato)

Questions:

1. Do some research on the internet. What percent of shoes sold in the United States were domestically produced in the 1930s?  What percent of shoe sales are manufactured in the United States currently? List your sources.
2. Why would politicians continue to support the shoe Tariffs given so few Americans actually work in producing them?
3. In your opinion, should the shoe Tariffs continue? Why or why not?  Defend your answer.
4. Do some research on the internet. What is the Tariff rate on paper clips from China?  Should we continue that Tariff?  Defend your answer.

References:

Ahmad, Aida. (June 2012) Footwear Distributors & Retailers of America website. https://fdra.org/latest-news/shoe-importers-push-to-cut-us-tariffs/

“Footwear Customs: Key Issues” Footwear Distributors & Retailers of America website. https://fdra.org/key-issues-and-advocacy/footwear-customs/

Beaumont-Smith, Gabriella (March 2023) “Trade in Real Life:  Why You Should Oppose Shoe Tariffs with Your Heart and Sole. Cato Institute. https://www.cato.org/blog/trade-real-life-why-you-should-oppose-shoe-tariffs-heart-sole

Newcomb, Tim. (July, 2023)  “New Balance expanding U.S. Footwear Factories with $65 million Project in Maine.” Forbes. https://www.forbes.com/sites/timnewcomb/2023/07/21/new-balance-expanding-us-footwear-factories-with-65-million-facility-in-maine/?sh=517d30c8343d