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Some U.S. Tariffs Benefit The Well-Heeled  
User currently offlineAeroWesty From United States of America, joined Oct 2004, 20552 posts, RR: 62
Posted (7 years 2 months 2 weeks 4 days 21 hours ago) and read 1063 times:

From NPR:

Quoting http://www.npr.org/templates/story/story.php?storyId=10991519:

Oddly, the cheaper the shoes, the higher the tariff. A pair of $3 canvas sneakers has the single highest tariff in the United States: 67 percent. But $12 sneakers are assessed 37 percent, and for $300 Italian leather imports, there's no tariff at all.

Apparently, tariffs going back into the early 20th century are still on the books for inexpensive shoes to protect a domestic industry which no longer exists. One reason--there's no one in Washington tasked with overseeing the myriad of tariffs the U.S. applies to a varied number of imports. Why aren't these tariffs removed? Because the issue isn't sexy enough to garner support, as there's no domestic industry currently impacted by them.

The direct link for the audio report:

http://www.npr.org/templates/dmg/dmg...-1&thingId=10991519&tableModifier=

Odd state of affairs. A tax which could have a direct impact on the budgets of low-income households if it was eliminated has little priority. I wonder how many other tariffs there are to "protect jobs" which no longer exist. As a free-marketeer, I find tariffs a bitter pill to swallow, especially when there's nothing to protect, and the tax paid isn't equal according to the value of the product.


International Homo of Mystery
12 replies: All unread, jump to last
 
User currently offlineIFEMaster From , joined Dec 1969, posts, RR:
Reply 1, posted (7 years 2 months 2 weeks 4 days 20 hours ago) and read 1054 times:

Quoting AeroWesty (Thread starter):
Some U.S. Tariffs Benefit The Well-Heeled

Brilliant retitling!


User currently offline767Lover From , joined Dec 1969, posts, RR:
Reply 2, posted (7 years 2 months 2 weeks 4 days 18 hours ago) and read 1038 times:

Interestingly, this "cheap shoe tarriff" is a modern-day phenomenon in Europe...

The European Union has been split by demand from countries with major footwear manufacturing bases to impose taxes to counter a flood of cheap shoes from the Far East.

From The (London) Independent, September 2006

http://findarticles.com/p/articles/mi_qn4158/is_20060915/ai_n16739483

The European Union on Wednesday adopted, by a narrow majority, new anti-dumping measures to tackle a flood of cheap leather shoe imports from China and Vietnam.

The new anti-dumping measures come into force on October 7, with import duties of 10 percent on Vietnamese shoes with leather uppers, in place of the current temporary duty of 16.8 percent.


http://www.eubusiness.com/Trade/061006080351.k4h5bfqo (October 2006)


User currently offlineMDorBust From , joined Dec 1969, posts, RR:
Reply 3, posted (7 years 2 months 2 weeks 4 days 17 hours ago) and read 1034 times:

Quoting AeroWesty (Thread starter):
...there's no domestic industry currently impacted by them.

Does the tarriff apply to all shoes coming into the US or only to shoes made by companies not based in the US? There most certainly is a US shoe company.




Oh, and Wolverine.


User currently offlineAeroWesty From United States of America, joined Oct 2004, 20552 posts, RR: 62
Reply 4, posted (7 years 2 months 2 weeks 4 days 17 hours ago) and read 1026 times:

Quoting MDorBust (Reply 3):
Does the tarriff apply to all shoes coming into the US or only to shoes made by companies not based in the US?

My understanding is that it's an "import duty" on shoes manufactured overseas, whether for a U.S. based company or not.



International Homo of Mystery
User currently offlineMDorBust From , joined Dec 1969, posts, RR:
Reply 5, posted (7 years 2 months 2 weeks 4 days 17 hours ago) and read 1025 times:

Quoting AeroWesty (Reply 4):
My understanding is that it's an "import duty" on shoes manufactured overseas, whether for a U.S. based company or not.

So pretty much, other than specialized footwear it applies to almost every shoe sold in the US.

I still can't get too worked up about this as the price is already figured into the retail price of the shoes. The guy buying the $300 shoes without the tariff is still paying a lot more tax than the guy buying the $3 shoes with the 37% tariff.


User currently offlineAeroWesty From United States of America, joined Oct 2004, 20552 posts, RR: 62
Reply 6, posted (7 years 2 months 2 weeks 4 days 17 hours ago) and read 1024 times:

Quoting MDorBust (Reply 5):
The guy buying the $300 shoes without the tariff is still paying a lot more tax than the guy buying the $3 shoes with the 37% tariff.

Except if you're trying to support a family on basic wages which doesn't allow for many luxuries, and those $3 sneakers for your kids are $8 because of the import tariff--they're paying far more percentage-wise on those shoes to "protect" an industry which doesn't exist.



International Homo of Mystery
User currently offlineUH60FtRucker From , joined Dec 1969, posts, RR:
Reply 7, posted (7 years 2 months 2 weeks 4 days 2 hours ago) and read 975 times:

Quoting 767Lover (Reply 2):

I mentioned this same thing in the deleted thread.

The way I interpreted the intent of the tariff was to tax imported shoes (especially the cheap ones that flood the market from third world nations), with the hope that it may "level the playing field" for the more expensive to produce - domestic shoes.

But I don't know how well that works out in reality. Domestic shoe manufactures are going to attempt to match the retail price of competitor shoes. ...Which already have the tariff costs built in. So just because domestic produced shoes do not have a tariff on them, does not mean that they will inherently cheaper.

It seems it does little to level the playing field.

Quoting MDorBust (Reply 5):
So pretty much, other than specialized footwear it applies to almost every shoe sold in the US.

I still can't get too worked up about this as the price is already figured into the retail price of the shoes. The guy buying the $300 shoes without the tariff is still paying a lot more tax than the guy buying the $3 shoes with the 37% tariff.

But are you not arguing in favor of unnecessary taxation?

The tariff is simply placing an absurd additional cost on shoes, while failing in its attempt to promote domestic shoes. I see no reason to indirectly tax the poor. We ought to abolish the tariff, or if we're going to keep it, then it ought be to be a flat fee across the board - and not trickle off as the price increases.

Personally, I'm for helping the poor whenever possible, in favor of free markets and less government taxation!

Quoting AeroWesty (Thread starter):
I wonder how many other tariffs there are to "protect jobs" which no longer exist. As a free-marketeer, I find tariffs a bitter pill to swallow, especially when there's nothing to protect, and the tax paid isn't equal according to the value of the product.

I wonder how much money the government collects each year from tariffs?

I'm sure it wouldn't hurt to establish a committee to review current tariffs, and make a list of those which have become outdated.

-UH60


User currently offlineMDorBust From , joined Dec 1969, posts, RR:
Reply 8, posted (7 years 2 months 2 weeks 4 days 1 hour ago) and read 962 times:

Quoting AeroWesty (Reply 6):
and those $3 sneakers for your kids are $8 because of the import tariff--they're paying far more percentage-wise on those shoes to "protect" an industry which doesn't exist.

uh, that's a 375% tariff...

We're talking about a 67% one.

Little difference.

It's important to realize that 67% of a pair of three dollar shoes is about $2. 37% on the more expensive shoes is about $4 1/2. So the more expensive shoes are still paying more in tariff, about twice as much.

Now, I don't know the particulars of the tariff, but I would imagine that the scaling is so that more expensive shoes still pay more money, just less of a percent.

Another question: Has the tariff been adjust since it's introduction in the early 20th century when $3 and $12 dollar shoes were not the garbage they are today... and $300 shoes were amazingly rare. If so, perhaps the tariff needs adjusting in order to accommodate a more modern pricing scale for shoes.


User currently offlineAeroWesty From United States of America, joined Oct 2004, 20552 posts, RR: 62
Reply 9, posted (7 years 2 months 2 weeks 4 days 1 hour ago) and read 962 times:

Quoting UH60FtRucker (Reply 7):
But I don't know how well that works out in reality. Domestic shoe manufactures are going to attempt to match the retail price of competitor shoes. ...Which already have the tariff costs built in. So just because domestic produced shoes do not have a tariff on them, does not mean that they will inherently cheaper.

The idea behind tariffs is not supposed to be entirely punitive, but mainly to protect domestic production. One area that was recently debated a few years ago was a tariff on imported shrimp. Shrimp and prawns can be farmed so cheaply overseas, it was hurting domestic shrimpers. Even with the new tariffs, I can still buy a pound of frozen imported shrimp of good size and of excellent quality for about $5/pound, often less. Wild U.S. shrimp costs nearly twice that, so all the new tariffs did was make imported shrimp a bit more expensive, but didn't level the playing field. That's punitive in my mind. I'll buy $5/pound shrimp for everyday use, but rarely will spend $10/pound for the same thing unless it's a special occasion. I have no price incentive to buy domestic shrimp, the reason for tariffs in the first place. But it's a bit more complex than that. The U.S. has price supports on sugar, so candy manufacturers have moved production to places like Canada to buy cheap sugar, since the finished product doesn't have any further tariff on it simply due to its sugar content. A domestic "tariff", for lack of a better word, moved business out of the country.

Quoting UH60FtRucker (Reply 7):
I'm sure it wouldn't hurt to establish a committee to review current tariffs, and make a list of those which have become outdated.

I hope the same comes true, since I'm a free-marketeer, and believe the market should determine the price and origin of products. If it's no longer economically viable to make cheap shoes in the U.S., switch production to something that is in demand, then make it better to attract customers. We're quickly heading towards a manufacturing base which only makes what is too expensive transportation-wise to import.



International Homo of Mystery
User currently offlineAeroWesty From United States of America, joined Oct 2004, 20552 posts, RR: 62
Reply 10, posted (7 years 2 months 2 weeks 4 days 1 hour ago) and read 955 times:

Quoting MDorBust (Reply 8):
uh, that's a 375% tariff...

We're talking about a 67% one.

No, it's not a 375% tariff. Tariffs are assessed on the wholesale price, not the retail price. A $3 shoe would have a $2 tariff, making the wholesale price $5. Prices the retailer pays are usually set at a percentage of retail. When a retailer buys shoes they'll be selling at $8 they're paying about 50-60% of the retail price to their wholesaler (I've never been in the shoe business, but in general terms that's how it works). When I was in the entertainment industry, we sold our catalog product at 40% off retail to the wholesalers, but it was expressed as 60% to them. So a catalog movie which sold for $79.95 retail was shipped to the wholesaler for $47.97, 60% of retail, not off retail. New releases were sold at 55%, or $43.97.



International Homo of Mystery
User currently offlinePope From , joined Dec 1969, posts, RR:
Reply 11, posted (7 years 2 months 2 weeks 4 days 1 hour ago) and read 951 times:

Tariffs are a double edged sword. But what you point out in this thread is just the tip of the iceberg. If you really want to debate a difficult duty issue, look at what the US is doing with respect to anti-dumping duties (ADD's) on materials imported from China. In theory, ADD are imposed when a foreign manufacturer sells product in the US at a selling price below its cost. The theory being that the foreign manufacturer is "dumping" goods into the US market to create an artificial scarcity in the country of manufacturer in order to keep its profits high.

The problem is that China is considered a non-market economy (NME) under the US ADD rules. Therefore, a Chinese manufacturer's actual cost of production aren't used in conducting the analysis. Instead the US creates a hypothetical cost of manufacturing using surrogate country costs of inputs (i.e. energy from India, raw material from Taiwan, labor from Korea, etc. . . ) and then compares that hypothetical cost to the US selling price. These hypothetical costs are far greater than the actual costs of production resulting in almost a 100% finding that China is selling its goods into the US at a loss when common sense clearly shows that to be incorrect.

So who advocates for the imposition of ADD's? The US manufacturers who can't compete against the lower priced foreign goods. To add insult to injury, the Byrd Amendment provides that the ADD's imposed on the US importer of the foreign goods are then paid to the complaining US manufacturers who almost uniformly raise US prices now that competition has been eliminated. The Byrd Amendment has been ruled illegal by the WTO and is being phased out proactively starting October 2007 but all amounts collected through that point are to be distributed to the US manufacturers.

So what you ask? Who cares if we make foreign goods more expensive? Well, who do you think pays for those foreign goods? Answer - US consumers. Consumers pay billions of dollars more a year because of the ADD regime all to subsidize US companies that can't compete in the global marketplace because their cost structures are out of line.

The hypocrisy on both sides of the aisle on this issue is immense. Politicians are faced with either protecting labor by artificially raising the costs of goods or sticking it to consumers. ADD apply to hundreds of goods from honey to swimming pool chemicals to steel to plastic shopping bags to t-shirts to computer chips.


User currently offlineAeroWesty From United States of America, joined Oct 2004, 20552 posts, RR: 62
Reply 12, posted (7 years 2 months 2 weeks 4 days ago) and read 944 times:

Quoting Pope (Reply 11):
The theory being that the foreign manufacturer is "dumping" goods into the US market to create an artificial scarcity in the country of manufacturer in order to keep its profits high.

I've also heard dumping expressed as a way to gain market share, to take other companies out of the market, resulting in the ability to raise prices later, when there's little competition left.

There's also a third side of this issue--import quotas which count number of units, not dollar value. I gave an example in the now-deleted thread of how that can work to our disadvantage, with the country having quotas placed against them merely substituting higher-valued products to keep their dollar volume of trade at the same or greater levels.



International Homo of Mystery
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