How many of you went shopping on Black Friday looking for shoes? I did! Ever wonder why shoes are so expensive in the US? It is because there is a depression era tariff on imported shoes that has raised prices by as much as 67.5% for the last 80 years. It is called the Smoot-Hawley Tariff. In an economy like this one it does not help American families to have to pay more for essential goods. While some very specific niche shoes are still made in the US a majority of shoes are not longer produced domestically, although these manufacturers still employ many US skilled laborers in marketing, research ect. The tax is also regressive so more expensive designer shoes have a lower tax then mass produced sneakers. The text discusses dumping tariffs in which a foreign firm is exporting goods at a price below its average cost of production. The home firm will then respond by tariffing imports and are calculated as the difference between foreigns local price and export price. Is this what is going on here? Raising prices by 67.5% seems a bit excessive if this was the case in my opinion. What do you guys think? Is this protecting or hurting the typical American consumer?
KRUEGER, B. (1012). A shoe tariff with a big footprint.WallStreet Journal , Retrieved from http://online.wsj.com/article/SB10001424127887324735104578123523795505336.html?KEYWORDS=tariff
I think it is a way to balance wealth between rich people and poor.
ReplyDeleteYou want Nike?No problem.But you have to pay more tax.Then the government can use these money to subsidize poor people.
And I think it is also a way to divide essential and luxury.Without the tax the prices may be close then noboby would like to buy cheap and ugly shoes.
As long as foreign companies aren't dumping in the U.S. I agree that the tariff of 67.5% is a bit excessive. I love shoes, and I would definitely buy more if the shoes I liked were cheaper due to a reduction in tariffs. Less expensive goods always helps out the consumer, since it gives them a higher buying power and they can afford more for less. Having lower tariffs shouldn't hurt the companies in the U.S., as long as they have a niche market to sell to; their customers will most likely always buy those shoes.
ReplyDeleteReally don't see this form of tax as being beneficial especially since designer shoes have less of a tax. It really is extremely regressive and it is hurting the consumers who cant afford shoes cause of a tax that was implemented a long time ago.
ReplyDeleteI agree this tax is quite excessive. Being that most shoes purchased are those that are produced overseas because of the lower wages this has a large effect on Americans. Now I understand why Nike's are so expensive. Yet, this should cause increased purchases of shoes produced in America stimulating our economy. Although there are few American produced shoes it should support them. Being that it is a regressive tax, those imported shoes are balanced out as far a price goes. So regardless of which foreign shoes you purchase they will all cost relatively about the same.
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