Tue January 18, 2011
Planet Money

Sawing Apart Gym Shoes At The Port Of Long Beach

The U.S. Customs and Border Protection testing facility in Long Beach, Calif. looks like a cross between a university science lab and a theater props department. It's full of long work benches, people in white lab coats, and piles and piles of shoes, shirts and fabric.

The people who work here have a serious mission: to catch importers who are trying to game the tariff laws.

Every product that comes into the U.S. is subject to tariffs, taxes that importers pay to bring certain products into the country. How much tax or duty each importer has to pay is determined by the Harmonized Tariff Schedule, a very big book that classifies products in extremely fine detail. Canvas sneakers with rubber or plastic soles, for example, are assessed a duty of 37.5 percent, but if the sneakers are made of leather, the duty goes down closer to 10 percent.

These seemingly arbitrary distinctions create a huge incentive for importers to try and get around the rules, which is why this testing lab exists. The people who work here are constantly verifying that importers are bringing in what they say they’re bringing in, and that verification can get ugly:

"One of the tools they like to use is an autopsy saw," says Marian Federoff, a scientist at the lab, "It does a really nice job of cutting through the leather, textile and rubber plastic components that we are trying to separate."

In the 19th century, tariffs were the main way the government made money. But for at least 50 years now, tariffs have had fewer supporters. Pretty much every economist, left or right, says tariffs make the U.S. poorer and don’t save jobs. So why do they still exist? Michael Cone, a trade lawyer, cites two reasons "revenue generation and inertia." Copyright 2011 National Public Radio. To see more, visit http://www.npr.org/.

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