22 Nov A Shoe Tariff With a Big Footprint
By BLAKE W. KRUEGER
Black Friday shoppers looking for shoes on sale might not realize it, but much of the footwear sold in America would be instantly more affordable if not for a Depression-era tariff that keeps the price of imported shoes artificially high. For the past eight decades, the Smoot-Hawley Tariff Act of 1930 has raised the price of footwear from overseas by as much as 67.5%.
When the average American family buys 144 pairs of shoes for each child over the course of childhood, and when the average American buys eight pairs of shoes annually, price considerations are hardly a minor matter. The economy is inching its way back from a severe recession and the purchase of essential items is still difficult for many U.S. households. So as cost-conscious Americans clip every coupon, they might well wonder about government policies that no longer make sense and take needed money from consumers.
Smoot-Hawley set high tariffs on hundreds of products. In the decades since 1930, many of these rates have been reduced to more reasonable levels, or eliminated altogether. However, footwear tariffs have remained largely untouched. The thriving U.S. shoe-manufacturing sector of the 1930s is long gone, but what remains are protective tariff rates of 37.5%, 48% and some as high as 67.5%.
While most production has moved abroad, U.S. footwear brands and retailers still employ hundreds of thousands of people in product design and research, marketing, sales and distribution. Some niche footwear-particularly at the high end-is still made in the U.S., but 99% of the shoes we wear are imported. Government should not continue to penalize the 99%. There should be one simple rule: If the shoes aren’t made here, don’t tax them! Americans who buy shoes already pay income tax and usually sales taxes.
We also are paying a hidden tax on our shoes, as the tariff costs are passed right along to the American footwear consumer. A great example of this is a child’s canvas sneaker with a rubber sole. It is priced $10 at retail but could have been priced about $7, except for the fact that the U.S. footwear brand had to pay a 48% import duty at the border. For working moms and dads with kids, these added costs can really add up over the years.
Worse, the system is regressive. That is, more expensive, high-end luxury shoes are taxed at the lowest rate, usually around 12%-while more basic, mass-produced shoes are taxed at higher rates: 37.5%, 48%, etc. The Wall Street millionaire is paying a lower duty rate on his Italian leather loafers while low-income parents are paying four or five times the duty rate for their child’s shoes.
In recent years there has been an effort in Congress to fix this. The Affordable Footwear Act, introduced in 2009 with bipartisan support, would remove the duties on approximately one-third of all footwear imports, focusing on the most egregious of duty rates-mass-produced items and children’s shoes. Removing import duties on the shoes bought every day will put needed money back into the hands of consumers.
Congress will return for a “lame duck” session in the next couple of weeks. This is exactly the type of issue that should be addressed. It is time for this outdated, burdensome and costly system of shoe tariffs to take a hike.
Mr. Krueger is chairman, CEO and president of Wolverine World Wide, Inc. He also is chairman of the Footwear Distributors & Retailers Association.