The Real Consequences of Raising Tariffs for Bangladesh

As I noted yesterday, the Obama administration has suspended Bangladesh from the list of poor countries that receive preferential tariff treatment in the United States, citing concerns over workplace safety and inadequate labor laws. The vast majority of imports from Bangladesh will not be affected because apparel goods were already exempt from the program. But some tariffs will go up and the human cost of these new taxes is very real. 

The Wall Street Journal’s coverage of yesterday’s announcement includes this anecdote:

Higher porcelain duties will put a strain on the business of Ian Zucker, chief executive of 10 Strawberry Street in Denver, who imports dinnerware from Bangladesh for Bloomingdale’s, Wal-Mart and others.

“After the tariff goes in, I have to raise my prices 20 percent,” he said in an interview. “You think Wal-Mart’s going to say that’s OK?”

Mr. Zucker said he is likely to turn to China or Sri Lanka for dinnerware products, the making of which is labor-intensive, making countries with low wages especially attractive.

I wonder if the administration thinks it will get a thank-you card from unemployed Bangladeshi dinnerware makers now that they’re no longer being “exploited” by Western investors looking for low-wage labor.