The Retail Industry Leaders Association (RILA) asked the Office of the U.S. Trade Representative (USTR) to reexamine the impact of tariffs on foreign-made goods, calling current policies “regressive, discriminatory” and “ineffective.”
The trade group last week submitted its position in response to USTR’s Request for Comments on Advancing Inclusive, Worker-Centered Trade Policy. RILA urged USTR to loosen up the policy on tariffs, which it said affects women and low-income Americans more than other demographics.
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The U.S. Most Favored Nation (MFN) tariff regime, a tax on everyday staples like apparel and footwear, overburdens low-income or single-parent families, as well as people of color, RILA wrote, citing a Progressive Policy Institute (PPI) report from 2022. Part of the issue stems from the items taxed under MFN. Essential products like shoes and clothing make up a relatively small share of imports, but account for more than half of the MFN tariff revenue. What’s more, cheaper items are taxed more heavily than luxury goods, putting “much more pressure on lower-income households than higher-income households,” according to the Peterson Institute for International Economics.
The current system also fuels gender inequities, RILA wrote, citing research from the U.S. International Trade Commission that found “significant gender differences in tariff burden.” Products marketed to women were found to carry higher duty rates than men’s merchandise. Similar conclusions were made by PPI, which authored a white paper on the differences between tariff rates on men’s and women’s underwear. “Unfairness on underwear reflects a broader, bizarrely anti-lady pattern in our trade system: With a few exceptions, men’s apparel items are more lightly tariffed than women’s,” it wrote.
The Trump-era Section 301 tariffs on China-made goods add to the burden placed on all consumers and U.S. companies, according to RILA. During the five years that the tariffs have been in place, U.S. companies have paid over $191 billion in additional duties to the government—costs that come out of the consumer’s pocket. RILA said that a one-year, 10-percent increase in tariffs is associated with a 0.44 percent increase in the price of a product at retail. “The higher cost of goods diminishes the purchasing power of American workers’ wages,” it wrote.
In light of stubbornly high inflation, these duties hit even harder, RILA wrote, while trimming tariffs would make inflation more bearable. A 2022 Peterson Institute study projected that “the competitive impact of cutting the China tariffs could eventually lead to about a 1 percentage point reduction in inflation,” translating to nearly $797 in savings per U.S. household. Keeping the tariffs in place has also done little to change China’s transgressions around technology transfer, intellectual property or innovation, RILA said.
“Retailers share USTR and the Biden administration’s objective of promoting an inclusive trade policy that benefits all Americans,” RILA vice president of international trade Blake Harden said. “However, the current approach, anchored on a regressive and discriminatory tariff system, has proven ineffective.
“It’s time for USTR to reevaluate how U.S. trade policy can work for, not against, economic equality and growth here at home, as well as U.S. competitiveness abroad,” he added.
