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FACT: U.S. clothing tariffs are unfair to women.

THE NUMBERS: Average U.S. tariff rates* for clothing by gender, 2022 – 

* Tariff revenue divided by import value.  These calculations includes tariff revenue collected from both imports subject to MFN tariff rates, and from Chinese products subject to “301” tariffs (which often add 7.5% to existing rates). Import value includes clothing from MFN tariff sources, from China, and from countries exempted from tariffs under FTAs and trade preference programs.

WHAT THEY MEAN:

The House New Democrat Coalition’s eight-point trade policy plan — out last month from the NDC’s 11-member Trade Task Force, headed by Rep. Lizzie Fletcher (D-Texas) and co-chaired by Reps. Don Beyer (D-Va.) and Jimmy Panetta (D-Calif.) — has lots of ideas on digital trade, the China relationship, free trade agreements, farm exports, and more.  Included in the NDC’s list is a hope to “advance equity in trade policy by considering solutions to reduce gender bias and regressivity in the tariff system.” Here’s some background on the gender piece:

Our Valentine’s Day Trade Fact last February pointed out the strange fact that the U.S. tariff system taxes women’s underwear more heavily than men’s. Examination of the tariff schedules and import data across the clothing universe over the past few months shows that this underwear diss of women is not a weird anomaly.  Rather, it is a specific case of a larger systemic issue, which the NDC is very right to highlight: the tariff system in general taxes women’s clothing more heavily than men’s, imposing special charge on American women likely extracting above $2 billion per year. Here are the facts:

1. Tariff rates on average are higher on women’s clothes than on men’s: The U.S. Harmonized Tariff Schedule divides goods into 11,414 “lines,” each with a tariff rate. Chapters 61 and 62 cover clothes. Unique in the Tariff Schedule, they divide most clothes by gender and freely impose different tariff rates for similar items based on this division. For instance, men’s and boys’ cotton suit jackets under line 61033200 are taxed at 13.5%. The corresponding cotton jackets in the women and girls’ heading, at line 61043200, at 14.9%. More generally, 17 “headings” in Chapters 61 and 62 cover comparable clothes divided by gender:  men’s overcoats, women’s overcoats, men’s “suits and ensembles,” women’s “suits and ensembles,” men’s “shirts and blouses,” women’s “shirts and blouses,” men’s underwear, and women’s underwear. Here are the tariff rates in 2017* for these items, derived by dividing total tariff revenue by import value:

 *  Data is calculated using 2017 tariff revenue. The rates for 2022 would be higher, since additional tariffs on China have raised rates overall.

So in each category, tariff rates are higher on women’s clothes than on men’s. Combining all the categories, tariff rates on women’s clothing are on average 16.7%, 2.9 percentage points higher than the 13.6% average for men’s.

2. Free Trade Agreements Don’t Help Much and Might Accidentally Amplify Disparity: In theory, the U.S.’ free trade agreements and duty-free preference programs for developing countries should moderate and in some cases eliminate this disparity, by eliminating tariffs on both men’s and women’s clothes.  In practice, though, FTAs usually have clothing “rules of origin” so complex as to make them difficult to use, meaning they have less impact than most probably guess. Overall, the 14 U.S. FTAs provide 10% of American clothing imports, and the “CBI” and “AGOA” programs, which waive tariffs on Caribbean- and African-produced clothing, another 2%. So about 90% of the clothing brought into the U.S. comes with full tariff payments. Since 96% of clothing sold in American stores is imported, that means the large majority of garments include tariff costs. And on top of this, a group of researchers from the U.S International Trade Commission found that the FTA countries in practice ship more men’s clothing than women’s, meaning that the FTAs are likely saving men more money than women.

3. Women Therefore Pay More than Men for Similar Things: What does this all mean in practice? Last year’s tariff payments totaled $4.7 billion on $31.1 billion worth of women’s clothes, and $3.1 billion for $24.2 billion worth of men’s clothes. Or, in more direct terms, markups and U.S. transport and overhead costs mean that the cost of an average shirt or coat roughly quadruples from arrival at the border to the cashier, the tariff system appears to be raising the price women pay for clothes, relative to men, by an average of an extra dollar per garment. Looking at this another way, a 2018 working paper from the U.S International Trade Commission concluded that the higher rates on women’s clothes — their finding, pre-“301” tariff, was 14.9% for women’s clothes and 12.0% for men’s — plus the fact that women on average tend to purchase more clothing than men, meant that buyers of women clothes shouldered an additional $2.77 billion in tariff burden than buyers of men’s clothes. Gender bias in the tariff system accounted for about $1.8 billion extra burden on buyers of women’s clothing as of 2015, and presumably somewhat more now.

Conclusion: In sum, the US tariff schedule explicitly taxes women more heavily than men for the same sorts of things.  In doing so, it imposes a kind of gender surcharge of at least $2 billion a year.  This appears to be the only federal tax in which rates differ based on gender.  Our V-Day conclusion on U.S. underwear policy — “Seriously?! Boo! Do better! 😡😡😡 — applies in this larger case too. And Rep. Fletcher and the NDC’s Trade Task Force earn enthusiastic applause for bringing this into the Congressional debate.

Special Note: Research and drafting for this Trade Fact by PPI 2023 Policy Fellow Elaine Wei.

FURTHER READING

House New Democrat Coalition’s trade agenda.

Our previous Trade Fact on underwear tariffs.

Mosbacher Institute on the gender bias in tariffs.

Gailes et al. (2019) on the gender bias in tariff burdens.

Katica Roy proposes a solution for the different tariff rates.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

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