ing those sales is illustrated by the fol-lowing breakdown of the pre- devalua-tion price of a case of champagne atvarious stages on its journey fromFrench port to American celebrant.
Breakdown of French champagneprice, per case of twelve bottles:
2.25
3.71
7.20
Average importer's markup,
approx. 2212 per cent
7.00
Port dues
.60
N. Y. State tax
.98
Average wholesaler's markup,
approx. 15 per cent
6.68
Average retailer's markup,
approx. 50 per cent
23.01
Thus a bottle of champagne forwhich the French supplier gets about$ 1.66 is sold retail for about$ 5.95. Ifthe New York customer buys his cham-pagne by the bottle in a restaurant, hewill be charged closer to fifteen dollars,and in a night club he will probablypay twenty.
The spread between American re-tail prices of imported goods and theirpurchase prices in the country of originvaries widely from commodity to com-modity. There is usually no importduty, or a very low one, on raw mate-rials.( Imported wool, which competeswith native wool, is an outstanding ex-ception.) For semi- manufactured goods( Italian felt, for example) the dutyis generally moderate, since American manufacturers( of hats, to keep thesame example) have an understand-able interest in holding down the costof raw materials. But finished manu-factured goods destined for retail salein competition with American goodsnearly always face large tariffs. AnItalian hat retailing for the equivalentof seven dollars in Rome is sold inWashington for thirty- five, a markupof four hundred per cent. This mark-up, as is true of the champagne, re-flects not only high tariffs, but the notuncommon decision of the American seller to treat the article with an Iм-PORTED label as a high- priced, lowturnover, snob- appeal item.
The champagne- price breakdownabove illustrates the major factorsthat determine the American salesprice of all imported consumer articles.
They are: cost of produc-tion, coupled with therate of exchange at whichthat cost is translated intodollars; American tariffsand excise taxes; andmarkups by importer,wholesaler, and retailer.Many European ex-change rates have nowbeen pushed down tolevels that should give theEuropean exporters greatadvantages in the dollarmarkets. As for Europeanmanufacturing expenses,
they are getting a good going- overboth by ECA experts and a lot of ama-teur economists, but it is apparentthat higher productivity abroad won'tfurther lower prices of foreign goodsappreciably for some time to come.
The second major factor that de-termines prices of imported goods isthe tariff. A strong case can be madefor the argument that since Recipro-cal Trade began we have made steadycal Trade began we have made steadyprogress in lowering tariff barriers witha view to encouraging imports, as thefollowing table shows:
Duties per centof total value of:Dutiable Dutiableimports
Underwood Law( 1913-1922)Fordney- McCumber
( 1922-1930)
and free
imports
combined
EFFICIENCY&
SALES
rier of the Smoot- Hawley days waspartly due to the impact of fixed du-ties on goods imported at depression-low prices.
The barrier put up by tariffs is madehigher by the dilatory, uncertain, andoften just arbitrary ways in which ourcustoms procedures work. Customs as-sessors at each port constantly endeavorto reclassify imported goods into highertariff brackets. The port of New Or leans , for example, decided that applecider was a sparkling wine, and there-
&
27.0
9.1
38.5
14.0
Smoot- Hawley( 1930-1933)Reciprocal Trade Act:1939, a prewaryear1947, a postwaryear
MARKED- UPIMPORTS
52.8
17.7
37.3
14.4
19.4
7.6
This table does show a steady lessen-ing of the burden that tariffs impose onimports. However, averages are alwaystricky, and probably nowhere more sothan in tariff comparisons. Our tariffstructure remains one of the most com-plicated in any country, with a fixedduty on some articles, a tax propor-tionate to value on others, and in somecases a combination of both.
The decline in percentage tariff fig-ures in recent years is partly due to thehigher prices caused by wartime infla-tion, just as the big proportionate bar-
fore subject to the same duty as cham-pagne. A woolen sweater dutiable atabout twenty- five per cent is reclassi-fied if it has a neckband sewn on, andthe duty may easily be doubled. Simi-larly, duty can be doubled by putting amonogram on a shirt, by putting elasticon childrens' trousers, or clocks on apair of socks. Imported forks( notspoons or knives, just forks) must bestamped individually with the nameand address of the maker. There are athousand other examples of the strangeprocedures of customs authorities.
The Reporter, October 11, 1949
26