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Retailers Plug Lower US Prices After TPP Tariff Cuts

by Mike Godfrey, Tax-News.com, Washington

16 May 2016


In a recent paper, the National Retail Federation (NRF) argued that the Trans-Pacific Partnership (TPP) trade treaty would greatly benefit American retailers and consumers by lowering US tariffs on imported goods.

In that respect, the NRF noted that, as the United States already has free trade agreements and reduced tariffs with six TPP countries (Australia, Canada, Chile, Mexico, Peru, and Singapore), the real potential for tariff cuts lies in the addition of the five other TPP partners: Japan, Malaysia, New Zealand, Vietnam, and Brunei.

Over time, the TPP would eliminate nearly all member countries' duties affecting imports of goods. The United States would cut roughly 6,000 tariffs on imports after the TPP agreement is fully implemented.

The NRF pointed out that, in 2015, the United States collected nearly USD6bn in tariffs on imports from TPP countries. An estimated 70 percent of those duties were assessed on US imports of consumer goods, and currently get passed to consumers in the form of higher prices.

"While overall average US tariffs are low (1.5 percent in 2015)," the NRF said, "for some consumer goods they are very high. US tariffs on apparel range up to 32 percent; and on footwear, up to 67.5 percent. … The impact of these tariffs falls most heavily on low-income American families."

It concluded that elimination of the US tariffs "will lead to lower consumer prices or broader product selection. The US retail industry is highly competitive – too competitive to afford retailers the luxury of padding their profit margins with the duty savings. While some may use the savings to upgrade their product offerings, others will lower prices."

TAGS: tax | free trade agreement (FTA) | Brunei | Chile | tariffs | trade treaty | Australia | Mexico | Singapore | agreements | Canada | Malaysia | New Zealand | Peru | United States | import duty | retail | trade | Japan | Vietnam

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