Carpe Diem

The US has imposed protective shoe tariffs on Americans for decades, even with no domestic shoe industry to protect

Almost all (99%) of the footwear Americans purchase is imported, so there is no longer a domestic shoe industry that needs special-interest protectionist trade legislation to compete more successfully with lower-cost foreign competitors.  And yet remarkably, Americans are still paying protective tariff tax rates of between 37.5% and 67.5% on imported footwear as a legacy of the Smoot-Hawley Tariff Act of 1930.

Blake Krueger, chairman of the Footwear Distributors & Retailers Association, explains in yesterday’s WSJ:

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%.

Pretty ridiculous that even without a domestic shoe industry engaged in lobbying and rent-seeking to retain their politically-enabled insulation against foreign competition, the tariffs self-imposed taxes on millions of American consumers remains intact and unchallenged.

But maybe there’s now some hope, if our dysfunctional political leaders can exhibit a rare lapse of sanity and do the right thing:

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.

MP: Maybe this is a good example of why we should have more legislation with an “expiration date” (sunset laws). It seems like this trade legislation would have died decades ago without a domestic industry to support its continuation.

HT: Fred Dent

11 thoughts on “The US has imposed protective shoe tariffs on Americans for decades, even with no domestic shoe industry to protect

  1. I agree with your conclusion in spirit, Dr. Perry, but I am just not sure “sunset laws” are politically viable. I mean, the Patriot Act had an expiration date and it’s been extended multiple times. Same with the income tax. FDIC was meant to be temporary, as were the Bush tax cuts. So many of these “temporary” government programs and plans are supposed to be temporary, but they keep being extended. The better option would be to not let Congress pass these laws in the first place.

    • Agree 100% Jon Murphy: Congress should not be allowed to pass laws in the first place, but they continue to do it, even those the Constitution prohibits them from passing. Until that problem is fixed, a poor second choice may be the sunset clause. At least the onerous thing, whatever it is, must be dredged back up and voted on again. It seems at least theoretically possible that some laws can be removed in this manner. It also provides Congress with busy work that may reduce the harm they can inflict in the form of new legislation.

      • Like the idea of congress working on the maintenance activities rather than creating new solutions to problems that only exist in their minds.

    • The Bush tax cuts were not meant to be temporary, but that is all that the Republicans in the Senate could arrange.

      Why Are the Bush Tax Cuts Expiring?
      05/26/2010 – TaxFoundation
      === ===
      [edited]  During the legislative fight over tax cuts in 2001, Senate Republicans could not predict with certainty that they would reach the 60-vote threshold of support that would have enabled them to make the tax cuts permanent. As a result, when Congress passed the first of many tax cuts in May 2001, it passed it as a reconciliation bill which needs only 51 votes. That was the so-called Bush tax cut, formally known as the Economic Growth and Tax Relief Reconciliation Act (EGTRRA, pronounced egg-tray).

      Because the bill was passed under reconciliation, revenues further than 10 years in the future could not be changed. And so, on December 31, 2010, all of EGTRRA was set to expire and revert to 2001 law.
      === ===

  2. From the heel of my excellent New Balance running shoes and I quote:
    “Handmade in the United States”

    I can’t read the WSJ article, but it should be noted that footwear imported from countries that the U.S. has a Free Trade agreement with (ie. Mexico and Canada) are probably tariff free.

  3. Gee, we still have Federal Telephone Excise Taxes that were scheduled to end “six months after the date of termination of hostilities in the present war.” [That would be WWII].

  4. Cit

    From the heel of my excellent New Balance running shoes and I quote:
    “Handmade in the United States”

    From the New Ballance website: As the only athletic footwear manufacturer currently making shoes in the U.S…

  5. Our dedicated legislators never cancel any tax once it is enacted because it makes them look like they didn’t understand the consequences of the tax in the first place and because it is bringing in some level of revenue (however miniscule).

  6. Interesting how your use of “tax” as a replacement for “tariff” is meant to have negative meanings.

    Some Americans (though not the ones here usually) are so far gone so as to consider tax hikes as not such a bad thing.

    The divide of LIFESTYLES and WORD MEANINGS is such an interesting concept to me amongst the right, the left, and the even the top; yet (for the right and left at least) they are probably the biggest decider in voting and legislation.

    America, from a policy standpoint, seems so far gone in this sense that it doesn’t even matter anymore. Stupid policies like this have spread so far down into the cracks, that I don’t even know how we would rid ourselves of them. American viewpoints are so different that “tax” and “tariff” mean different things to different people.

  7. This only partially explains the empirical/anecdotal shelves full of low- (and falling) -quality over-priced Red Chinese (VietNamese, Malaysian…) shoes.

    Yah, New Balance and Red Wing (MN) still make SOME of their lines of shoes in the USA. Red Wings are very expensive, both US and foreign-made.

    Huh. I usually replace “tax” with “extortion” and “taxpayer” with “tax-victim” in the interest of truth in labeling.

    Direct election of senators, the Fed, income extortion, Socialist Insecurity, Medicare, Medicaid and ObummerDoesn’tCare should all be treated as temporary aberrations.

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