I admit, I am a fan of the television series “Say yes to the dress. I started watching with my three daughters, but soon realized that I had strong opinions. I understand now. I like princess cuts. I appreciate Pnina Tornai dresses. And I worry about the price of dresses that each of my daughters will say “yes” to. Importantly, US tariffs add a lot to the price of dresses, especially right now, given the US-China trade war. So, as a father keen to avoid paying big import duties on three dresses, let me come up with a strategy for the industry.
Wedding dresses are a $ 2 billion industry. Some 80 percent of the dresses are imported from China, making the industry very sensitive to trade tensions. A dress can take over a hundred hours to sew, and China has a lot of skilled embroiderers, including 200,000 job in a city in Guangdong province. The dresses are made of silk and various synthetics, and these materials determine the tariff applicable to the dress. This is where my strategy comes into play.
Two main tariff codes are in play: 6204.49 for silk dresses and 6204.43 for synthetic fiber dresses. The United States’ most-favored-nation (MFN) applied (and bound) tariff is 6.9 percent on the former and 12.3 percent on the latter. This means that these two tariffs are capped at their legal ceiling under the World Trade Organization (WTO). Normally, these rates could not be increased. But these are not normal times.
President TrumpDonald Trump The Memo: The Unbound Obama, On The Run Iran Says U.S. Ones To Join Nuclear Deal On Third Anniversary Of Withdrawal Aggressions Against Roe v Wade Rise READ MORE included wedding dresses listed 4A of its Section 301 customs duties on China, adding an import duty of 25 percent in addition to the usual MFN rates. President BidenJoe Biden Defense attorneys for suspected Capitol rioters to visit US Capitol Sasse to introduce legislation giving new hires signing bonuses after negative jobs report Three questions about Biden’s conservation goals READ MORE has not yet canceled these additional tariffs. The industry cannot be “re-grounded” and supply chains will not be moved out of China. Besides creating revenue for the government, the only thing these tariffs do is encourage a flow of false wedding dresses in the US market.
So what can be done? Biden could negotiate a deal with China on Section 301 tariffs, but it will take longer than many had hoped. The United States could also unilaterally reduce its applied MFN tariffs, but don’t hold your breath.
What if importers of high-end dresses could take matters into their own hands? If there’s one thing I’ve learned from Say Yes to the Dress, it’s that wedding dresses are different. They are not really dresses. It’s art. Wearable art.
Specifically, let me suggest that wedding dresses are sculptures, falling under tariff code 9703, defined as “original sculptures and statues, in any material”. Could a wedding dress be a sculpture? A sculpture is a unique three-dimensional work of art. It’s unique, but copies are allowed. Better yet, 9703 is not listed under Section 301, and the United States’ MFN tariffs are bound at zero.
Crazy? Wait a minute. A Footnote states that 9703 “does not apply to mass-produced reproductions or works of conventional craftsmanship.” Some high-end wedding dresses can erase that bar when it comes to being a “true work of art”, delivered with the artist’s bio. In addition, once the dress is worn, it can also be displayed. You get to where it leads.
An American Customs of 1990 decision found that two South African bridal garments were not art for tariff classification reasons. Yet this case did not compare clothing to a sculpture and did not benefit from recent trends in the booming wearable art market.
Would this tariff reclassification work? Customs experts at Flexport say it would be “a stretch”. Yes, but the big picture is that businesses need to get creative in the face of the new normal in American commerce. McKinsey reports that the fashion industry accounts for just 6 percent of U.S. imports but pays 51 percent of the nation’s tariff bill.
What is plan B? Maybe Pnina Tornai can add a few gimmicks to qualify her dresses as zero tariff under the WTO Information Technology Agreement.
Marc L. Busch is Karl F. Landegger Professor of International Trade Diplomacy at the Walsh School of Foreign Service at Georgetown University, Non-Resident Senior Researcher at the Atlantic Council and host of the podcast TradeCraft.