I’d love to speak with someone who was in the room years ago when US policymakers decided to charge women higher tariffs than men for fashion.

‘Pink tariffs’, they call them. The US is the only nation that charges gender-based tariffs on apparel, I’m told by global trade experts, none of whom seem to know why, nor how they started. It’s been going on for decades — since at least 1989, though they may date back earlier.

Women pay on average 3 per cent more in tariffs than men, but it’s sometimes much more. Last year, the tariff for a pair of women’s cotton underwear was $1.15, for instance, versus 75 cents for men’s cotton briefs.

Those fees add up, and they’re one of the reasons that women pay more for their clothes than men. Women paid $2 billion more in these tariffs in 2018 than men, according to the Progressive Policy Institute, a Washington DC think tank, and bear 66 per cent of the apparel tariff burden.

“Isn’t it outrageous?” asks Ed Gresser, director of trade and global markets at the Progressive Policy Institute, who has been sounding the horn on pink tariffs. He mentioned them to me when we were chatting about US President-elect Donald Trump’s threats to raise tariffs across the board. If that happens, the inequity is likely to compound.

Yes, it is outrageous. Especially since, thanks to the gender gap in pay, women in the US generally earn 84 cents to a man’s dollar. We earn less and we pay more.

Two US Representatives, Lizzie Fletcher of Texas and Brittany Petterson of Colorado, have proposed a bill that would require the US Treasury Department to study pink tariffs, in hope of developing a more equitable regime.

“Pink tariffs reflect a disparity in our trade system and a larger, systemic issue. And although the tariff system isn’t something most of us are thinking about when we are shopping for products, we are experiencing the impacts in our carts in the form of higher prices,” Fletcher said in an email this week. “This is a cost of being a woman that we should address.”

Both Fletcher and Petterson are Democrats and they recognise that the bill is unlikely to go anywhere with Republicans ruling the House. So they’re aiming to raise awareness, for now.

“For years, there has been talk about the ‘pink tax’, often described as the price differences between women’s razors and men’s razors or between a pink teddy bear and a blue one, that has had an impact. But what we see here — the fact that tariffs on women’s products are higher than men’s — shows that this gender bias happens well before products even make it onto the shelf,” said Fletcher. “And with President-elect Trump identifying raising tariffs as [one of] his key policy initiatives, we really need to understand how this will hurt consumers, and women in particular, in the form of higher prices.”

Unpacking the pink tax

Unless you have the mindset of a forensic accountant, the 111,414 lines of the staggeringly convoluted US tariff codes — each line being a separate tariff — may remind you of the scene in Ferris Bueller’s Day Off when a high school economics teacher stuns his class into somnolence by teaching how the 20 per cent tariffs imposed by the Smoot-Hawley Tariff Act of 1930 plunged the world further into the Great Depression.

It’s a funny scene. It’s also eerily relevant today. Tariffs can raise prices dramatically for consumers at the cash register, causing people to buy less. Those 1930 tariffs sparked a global trade war, which slashed US exports from $5.2 billion in 1929 to $1.6 billion in 1931.

So try thinking of tariffs for what they really are: taxes. When a company, say, Coach or J Crew, imports clothes, handbags or shoes into the US, the company pays the tax to the US Treasury, akin to a sales tax paid at the border. Like all costs of manufacturing, this gets multiplied up the chain until the consumer pays for it at the cash register.

A rule of thumb is that $1 in costs will contribute to a $3 or $4 price increase, says Colin Browne, who worked his way from supply chain officer to chief operating officer at apparel giants including Under Armour, VF Corp and Li & Fung. So that $2 billion in extra tariffs on women’s apparel could be as much as $8 billion at checkout.

Browne, who is now chief executive of Cascale (formerly known as the Sustainable Apparel Coalition), is currently fielding calls from the organisation’s 300 members desperate to know how to prepare for more tariffs. Consultants are firing up their spreadsheets, about to have a field day.

They’ll advise companies to substitute textiles (polyester tariffs are higher than cotton), move production around the globe and add nonsensical features to designs that reduce tariffs — such as pasting a thin layer of fabric to the rubber soles of shoes, because tariffs are lower for cloth-soled footwear. All these moves will benefit the big brands that can afford to hire tariff experts.

“This is where the good get going,” Browne says. “When the playing field is level, everyone has the same advantage. When it’s not, that’s when I take advantage and get ahead of others who aren’t as prepared.”

It does seem like those tariff-setters thought of everything. They even closed a potential loophole for genderless apparel: ‘Unisex’ clothing is tariffed as womenswear, according to the US code.

The nearshoring of fashion has become increasingly popular since the first Trump tariffs. It’s shifted production to Mexico and Guatemala, for instance. But with Trump now threatening tariffs against US neighbours including Canada and Mexico, womenswear makers may have little choice but to pay up and pass the costs onto to consumers.

One way to avoid paying pink tariffs in the US is to buy apparel made entirely in the States, including fabric, buttons and zippers. There’s not a lot of that, but it is possible; and advocates say that with automation, a US apparel industry is capable of faster growth. American Giant sources its apparel entirely from the US, with only a few exceptions — a zipper part and merino wool, which can’t be raised in the US. Lake Jane Studio makes women’s cotton underwear in North Carolina from locally grown cotton. Vertically integrated Red Land Cotton makes high-quality bedding entirely in the US, including the cotton.

With 98 per cent of the apparel consumed in the US as imported — a quarter of it from China — the likelihood of escaping fashion tariffs here is lower than sea level. So it’s time to address pink tariffs and reduce the financial burden on women and girls, alike.

Gresser continues to try to focus policymakers’ attention on pink tariffs every chance he gets. “This is really a big outrage of US politics and it ought to be easy to fix,” he says. “No other country has this bias against women.”

View this article on Vogue Business.