The US-China trade spat keeps escalating. Donald Trump is now threatening another hefty round of tariffs on Chinese products, after China retaliated to a previous round with its own trade barriers against US goods.
US retailers have expressed concern about the impact the tariffs might have on their bottom lines—and their consumers’ wallets. “These tit-for-tat trade actions could spell disaster for the US economy and make it harder for Americans across the country to afford everyday products and basic necessities,” Matthew Shay, president and CEO of the National Retail Federation, said in a statement.
It makes sense that retailers are worried about the impact of the US-China standoff. But it might be surprising to learn the highest US tariffs aren’t against China, but its poor Asian neighbors. Countries such as Bangladesh and Vietnam export large volumes of clothes and shoes to the US, and those are items the US taxes at disproportionately high rates.
Pew Research Center analyzed the data from the US International Trade Commission and found that Bangladesh, Cambodia, Sri Lanka, Pakistan, Vietnam, and other such nations face the highest import duties because of their substantial trade in clothing and footwear. Much of this trade flows into the US, which now imports more than 97% of its clothing.
Typically, items the US imports in large volumes face fairly low duties, but as Pew has previously pointed out, clothes are the main exception. The situation is so pronounced that sweaters—yes, sweaters—generate more tariff revenue than any incoming product except personal cars.
“Nearly all Bangladeshi imports were subject to US duty,” Pew said, “and the tariffs on them were equivalent to 15.2% of the total value of that country’s shipments to the US—the highest such average rate among the 232 countries, territories and other jurisdictions in the ITC database.” In 2017, Bangladesh’s exports to the US totaled $5.7 billion, and 95% of them were clothes, shoes, headgear, and related items.
The reason for the high tariffs is classic—and many might say outdated—protectionism. As the Washington Post explained in a 2013 story (paywall), even though the US textile industry has dwindled to a tiny share of what it once was, the small manufacturers that remain exert a strong hold on their political representatives, who fight for them in trade deals. “It’s a classic story of the collective action problem,” Kim Elliott of the Center for Global Development told the Post. “Representatives from those districts are going to fight very hard. And you or I as consumers would get some benefit from lower tariffs, but we’re not going to vote on it. It’s that imbalance of interests.”
These policies have done little, if anything, to keep jobs making shoes or clothes in the US. But consumers feel their impact every time they buy a pair of foreign-made sneakers or jeans, whether they realize it or not. Meanwhile, factories in countries like Bangladesh are under intense pressure to keep prices low so stores stay flush with cheap goods, leading at times to unsafe conditions for workers.
Big brands, retailers, and the groups that represent them, such as the Footwear Retailers and Distributors of America, have battled against these duties for some time. Now they’re speaking out against the tariffs Trump has aimed at China over its theft of US intellectual property. They don’t want to see duties on Chinese goods start to look more like those from Bangladesh.