During this holiday season, many Americans will purchase a pair of shoes for themselves or to give as a gift. In fact, footwear ranks as one of the top gifts people buy for their friends and loved ones this time of year, according to the NPD Group. American footwear consumers may not realize, however, that the shoes they buy are taxed at a rate higher than almost any product sold in America today.
Tariffs (taxes on imports) average 1.4 percent for all consumer goods but can reach up to 67.5 percent for footwear, depending on the type of shoe. These tariffs stifle product innovation and needlessly drive up the cost of shoes at retail for everyone in America. An astounding and record-breaking $2.7 billion was paid last year alone in footwear taxes.
These tax rates were put in place in 1930, when the U.S. had a large domestic footwear manufacturing base and well before indoor shopping malls, Black Friday, Cyber Monday, and online shopping. We live in a much different world today.
In today's world, 99 percent of footwear is imported, but the vast majority of the value of every pair of shoes is produced here. The footwear industry employs hundreds of thousands of hardworking Americans in design, innovation, trucking, retail, marketing, administration, warehousing and logistics. Today, footwear companies support communities across the U.S. from New York and Boston to St. Louis, Missouri, Topeka, Kansas and Portland, Oregon. A robust footwear supply chain enhances every community in America.
One of the most important actions that Congress can take — to strengthen jobs in this industry and provide real value to American consumers — is approving the Trans-Pacific Partnership (TPP). This historic 12-nation free trade agreement, encompassing 40 percent of the world economy, eliminates 18,000 taxes on American businesses that want to sell more U.S. products overseas. It also offers the greatest footwear tariff reduction of any U.S. trade agreement in history, removing tariffs on 436 footwear classifications.
Providing this tariff relief to TPP partner countries will generate $450 million in savings for U.S. families in the first year alone and over $6 billion in savings over the first decade. This is money that our footwear companies can use to create more jobs across America. This is a trade agreement that will deliver greater value to footwear consumers, something on the minds of almost everyone at this time of year and critical to the single mom or working family trying to stretch their holiday budget a little further.
When Congress starts the New Year with its priorities for 2016, approving this agreement needs to be at the top of the list. For U.S. footwear companies and consumers, passing TPP would bring a little more holiday cheer.
Priest is president of the Footwear Distributors and Retailers of America (FDRA).