A Well-Shod Kick at Consumers

Americans who still think that a policy of excluding imports to prop up faltering domestic industries can be carried out cost-free are about to be reminded that it just isn’t so. Before the week is out, President Reagan is expected to act on a Cabinet-level recommendation to slash shoe imports by hundreds of millions of pairs over the next five years. The aim is relief for the U.S. shoe industry. But shoes made in America to replace foreign footwear would cost more. Who would pay the difference? Consumers, of course.

Most cheap shoes--those with a customs value of under $2.50--and most athletic shoes probably would not be affected by the quotas. That still leaves a lot of footwear from such places as Brazil, Italy, South Korea, Spain and Taiwan that would be kept out. The U.S. International Trade Commission, which proposed the quotas under pressure from Congress, estimates that with protectionism retail shoe prices would rise $1.28 billion a year.

The aim of all this is to try to recapture some of the market share that has been lost to overseas shoe producers, who now make 70% of all shoes sold in the United States. Foreign producers have the advantages of lower labor costs and, usually, more modern equipment. Whether those advantages would be eroded during the proposed period of protectionism is doubtful. The average American shoe worker earns only $14,000 a year. At best, according to government studies, 26,000 American jobs might be saved by imposing quotas. With higher shoe prices resulting from quotas, that works out to an annual subsidy of just under $50,000 for each job saved.

More than 300 bills before Congress aim at a little protection for this or that segment of American industry. But protectionism is never cost-free. It means means higher consumer prices. In time it means lost jobs as retaliatory steps are taken to bar U.S. imports from foreign markets. It is easy to forget that lesson of history. It will prove painful to have to learn it all over again.