“Pink Tax” Raises Price On Women’s Apparel

Accusations of sexist pricing, or a “pink tax,” on products designated for women by some retailers, was a major topic of discussion during the latest HeForShe Conference in Davos, Switzerland, and according to one Texas A&M University Bush School professor, it really is a tax – at least in part.

Research from Lori L. Taylor, the director of the Mosbacher Institute for Trade, Economics and Public Policy at the Bush School, shows that on average, the U.S. tariff on women’s imported clothing is 27 percent higher than the tariff on men’s imported clothing.

Taylor has tracked, researched and lectured on the issue of differential tariff rates on imported apparel based on gender over the past five years, but the topic has only recently grabbed national attention. Now, Taylor says, the gender bias inherent in the tariff code must be abolished. She brought focus to the issue of gender-based tariffs in a policy brief for the Mosbacher Institute’s The Takeaway titled “Fairer Trade: Removing Gender Bias in US Import Taxes.”

“We built a database of tariffs – those specifically defined by the gender of the wearer, and that took a while,” Taylor said. “After we had classified the tariffs as men’s or women’s or neutral, we found that tax rates were systematically higher for women’s apparel than for men’s. That isn’t always the case, but it is frequently the case.”

Taylor’s research showed that tariff rates on women’s goods are sometimes 10 percentage points higher than those on similar items for men, like suits, jackets, leather shoes, silk shirts and overcoats. However for swimsuits, men pay a tariff rate three times higher than women. Taylor said there is no obvious, underlying pattern to explain the differentials for gender-classified items.

American consumers would be the first to benefit if tariffs were abolished because tariffs boost the prices paid for both imported and domestic goods. Furthermore, because there is not much of a domestic apparel manufacturing industry to benefit from tariffs – fewer than 160,000 jobs nationwide –there would not be a major loss in US jobs. Taylor said lifting the apparel and footwear tariffs would also help bolster the U.S.’s presence in the developing countries that are the source of many imported apparel goods.

Eliminating the tariffs could be a challenge based on previous attempts from private companies. In 2014, Rack Room Shoes Inc. and Forever 21 Inc. argued before the Court of International Trade that U.S. Federal Government tariffs on imported apparel were discriminatory, because they were based on gender rather than non-gender factors, like the composition or weight of the materials. The Court of International Trade and the U.S. Supreme Court concluded that the tariffs are not discriminatory by design, but Taylor says they are by impact.

Taylor said if the courts continue to rule that the tariffs aren’t intentionally discriminatory, Congress could declare that importers have the option of paying the lower men’s or women’s tariff rate. Or, Congress could ban tariff differentials on products that are gender-classified. Taylor believes change will not come until more people realize the consequences of the issue.

“I don’t know if there’s any traction on Capitol Hill, because people don’t seem to be aware of the differences,” Taylor said. “It will require congressional action. I doubt this kind of change could be an initiative from the existing bureaucracy.”

Jawad Dar, a graduate research assistant for the Mosbacher Institute, contributed to the research.