ALEX BLUMBERG, HOST:
Hello podcast listeners, Alex Blumberg here with a quick message. As you all know, we are in the middle of T-shirt month, and a lot of people have been asking us, hey, I missed the T-shirts the first time around. Can I still get one? And the answer is yes, you can until the end of December. We are producing a second round of the T-shirts. You can buy it through this big beautiful website that we built planetmoney.com/shirt. Go there, click the chapter button and then click buy a shirt. All right, on with our regularly scheduled programming.
(SOUNDBITE OF LEAGUES SONG, "MIND GAMES")
JACOB GOLDSTEIN, BYLINE: I'm walking around the Port of Miami with Officer Lisa Sacco of U.S. Customs and Border Protection. We are literally waiting for our ship to come in.
LISA SACCO: There's our ship.
GOLDSTEIN: The ship is called the Hansa Kirkenes. This is the same ship you may have heard about on our last show about shipping containers. It left Cartagena, Colombia, about a week ago carrying all 6,078 of the PLANET MONEY women's T-shirts.
A giant crane lifts the container carrying all those shirts off the ship and it drops it at my feet, boom.
BLUMBERG: They made it. The PLANET MONEY women's T-shirts are here.
GOLDSTEIN: The PLANET MONEY women's T-shirts are here, and yet they are not quite here yet, Alex. If you've ever waited at an airport to clear customs, this is where our shirts are right now. They're waiting for permission to enter the country. So I asked Officer Sacco what could Customs be worried about with a container coming from Colombia to Miami? Drugs, guns?
SACCO: The only thing I can think of is that maybe a trade violation. Trade is a huge issue. I mean, that's - it's what we do is we protect our trade.
GOLDSTEIN: Protecting U.S. trade means that our T-shirts have to follow this incredibly elaborate set of rules that are part of U.S. law, and those rules are all spelled out in a giant book that's more than 3,000 pages long.
MICHAEL CONE: It is the book of everything, at least for the importer.
(SOUNDBITE OF DAN AUERBACH SONG, "I WANT SOME MORE")
GOLDSTEIN: Hello and welcome to PLANET MONEY. I'm Jacob Goldstein.
BLUMBERG: And I'm Alex Blumberg. Today on the program, it's just a short drive from the Hansa Kirkenes to the bridge that connects our T-shirts to the rest of America. But standing between our shirts and the rest of America is that book, the book of everything.
In this book is a powerful force. It creates and destroys entire industries. Powerful people and governments all over the world fight about what goes in it, and squadrons of government agents, using tools of violence and destruction, work to ensure that the rules laid out in that book are followed.
GOLDSTEIN: Also, the book tells us how much we have to pay to the U.S. government to bring the PLANET MONEY T-shirt to you.
(SOUNDBITE OF SONG, "I WANT SOME MORE")
DAN AUERBACH: (Singing) ...Never taste before. Oh, oh, oh, I want some more.
GOLDSTEIN: The official name for the book of everything is the "Harmonized Tariff Schedule Of The United States."
BLUMBERG: Rolls off the tongue.
GOLDSTEIN: It is - it's a lovely name. Michael Cone, a customs and international trade attorney in New York, he says the book lists the tax importers have to pay on approximately every single thing in the universe, including, of course, T-shirts.
CONE: And chapter 6109 covers generally T-shirts, singlets, tank tops and similar garments, knitted or crocheted.
BLUMBERG: That's us.
GOLDSTEIN: That's us.
BLUMBERG: That's the PLANET MONEY T-shirt.
GOLDSTEIN: Now, the average tax rate on stuff coming into this country is about 2 percent.
BLUMBERG: Two percent.
GOLDSTEIN: Not much. So in the book of everything, Michael Cone, he points to the rate we're going to have to pay for the PLANET MONEY T-shirt.
CONE: The tariff is 16.5 percent.
GOLDSTEIN: So 16 and a half percent is a lot.
BLUMBERG: It's a lot. And, Jacob, I talked to Michael Cone for a podcast we did several years ago.
GOLDSTEIN: Back when we started making the T-shirts.
BLUMBERG: But I do remember from way back then, I remembered chapter 6109 well because Michael Cone told me that 16.5 percent tariff, it could have been even more.
CONE: If you had made the decision to manufacture your knit T-shirts from man-made fibers, the normal duty rate is 32 percent. And we're talking, of course, polyester, rayon, things like that.
BLUMBERG: So it's twice as much almost to bring in a polyester shirt as it is to bring in a cotton shirt.
CONE: That's correct. And that's where you could see some shenanigans going on by some dishonest importers.
BLUMBERG: Because there's a huge incentive here to sort of say your shirt is cotton when, in fact, it's polyester because it's half as much.
CONE: There's a huge incentive.
BLUMBERG: And wherever there is an incentive to break the rules, there are people whose job it is to enforce the rules.
VONDI FORRESTER: I'm a detective of fibers and fabrics. I like to find out what it is, how it's made. And I love ripping stuff apart.
BLUMBERG: This is Vondi Forrester (ph). And when I talked with her, she worked at the port in Long Beach in a special lab. It was sort of like a cross between a university science lab and a theater props department. There were long work benches, burners and flasks. Vondi was indeed wearing a long white lab coat. And everywhere you looked, there were racks and racks of clothing or spools of thread or shoes or bolts of fabric.
GOLDSTEIN: And with all this stuff, Vondi and her colleagues are trying to figure out one thing - are importers, people like us, are they lying about what they're bringing into the country? And to figure this out, they do things like spray water at a supposedly waterproof coat because waterproof, for some reason, gets a much lower duty than regular clothes.
FORRESTER: So you can see here it's failing.
BLUMBERG: So they've got to pay a higher duty.
FORRESTER: They have to pay a higher duty.
GOLDSTEIN: Tariffs on shoes vary depending on how much leather is in them, so Marion Fedorov (ph) spends her days ripping shoes apart to analyze.
MARION FEDOROV: One of the tools that we like to use to do that is an autopsy saw.
GOLDSTEIN: And so you're about to cut the shoe.
FEDOROV: Here you go.
(SOUNDBITE OF SAW CUTTING)
BLUMBERG: And of course, there were T-shirts. They come with their own gruesome methods of figuring out if they're really made of what they're made of.
FEDOROV: It's a meat grinder for fabric.
BLUMBERG: Cotton dissolves in acid, polyester doesn't. You take a swatch of a shirt, grind it up then douse it in acid and weigh what's left over.
GOLDSTEIN: So, Alex, the meat grinder and the autopsy saw and all this, these are all ways of catching people who are actually lying. But there's something subtler you can do if you're an importer and you want to try to get around a tariff. You can tweak your product so it winds up in a different category in the book of everything.
BLUMBERG: We could say, for example, that our T-shirt is not actually a T-shirt with a 16.5 tariff. It's a toy that comes in free.
I mean, it's got a squirrel on it, right? Kids like squirrels. Squirrels are fun. It is not actually as crazy as it sounds. In fact, we wouldn't be the first to try this sort of thing.
(SOUNDBITE OF PILLOW PETS ADVERTISEMENT)
UNIDENTIFIED WOMAN #1: Say hello to the Pillow Pets.
UNIDENTIFIED CHILDREN: (Singing) It's a pillow. It's a pet. It's a Pillow Pet.
MARK TERATILLY: We have had a recent issue with pillows that are shaped like pet or, like, stuffed animals.
BLUMBERG: This is Mark Teratilly (ph). He's an import specialist at the Port of Long Beach. And he flags suspect shipments and sends them to the lab for analysis. He's in charge of fabric and yarn. And he says in cases like this, the Pillow Pet, he and his colleagues have to really dig deep and understand what is the essential character of the item before them? Is it fundamentally a pillow...
TERATILLY: At 6 percent duty under 9404.
BLUMBERG: ...Or a stuffed toy?
TERATILLY: Which is duty free in Chapter 95.
BLUMBERG: And this category blurring, it can get sort of existential. You know, Mark Teratilly told me in this case, with the Pillow Pet, it's actually a really hard call. And sometimes cases like this wind up in court.
GOLDSTEIN: So quick recap, if you're an importer and you're trying to save on tariffs, you can lie about what you're importing. You can go this existential route and try and, say, turn your pillow or T-shirt into a stuffed animal. And then there's this third thing you can do. Michael Cone points it out to me in the T-shirt chapter of the book of everything. Right next to where it says the tariff is 16.5 percent, there's another column.
CONE: It says free. Now, when you see...
GOLDSTEIN: Free, I like free.
CONE: (Laughter) We all like free. And if you jump through the right hoops and you follow the direction that Uncle Sam has provided, you can come in duty free.
GOLDSTEIN: In that column, where it says free, there are a bunch of abbreviated country names - Mexico, Honduras, Israel. These are all countries the U.S. has made free-trade deals with over the past few decades.
BLUMBERG: And a few years ago, the U.S. made a free-trade deal with Colombia. So we don't have to pay a tariff on the PLANET MONEY women's T-shirts because they were made in Colombia. The men's shirts were made in Bangladesh. We do not have a free-trade deal with Bangladesh, so we're paying the full 16.5 percent tariff on the men's shirts. And this is how a tiny tweak in U.S. tariff rules in the book of everything can create or destroy entire industries in other countries. Just two little letters in the free column of the T-shirt - CO, the abbreviation for Colombia, can mean the difference between having a whole country's industry succeed or fail.
GOLDSTEIN: Luis Restrepo is the CEO of the Colombian company that made our T-shirts. He says that if there were a tariff on Colombian shirts, his company couldn't export to the U.S. at all.
LUIS RESTREPO: No. To export into the United States - no. It will make our garments very expensive.
GOLDSTEIN: In other words, without this free-trade deal, the PLANET MONEY women's shirts that are arriving in Miami, they would not have been made in Colombia at all. They would have been made somewhere cheaper.
BLUMBERG: And the fact that we have this situation, Jacob, with our very own shirts where some of them come in at 16.5 percent and some of them come in for free just based on where they're made, that speaks to this really weird moment where at in history when it comes to free trade.
GOLDSTEIN: And it goes a long way back great, right? We've had a tariff on textiles in this country since 1789. That is the year the Constitution took effect, the year our current government started to exist. And the argument for the tariff has always been we need a tariff to protect manufacturers in this country to protect U.S. jobs.
BLUMBERG: And that argument held sway for a long time. But in the past few decades, another side of the tariff debate has gotten louder and more powerful. The companies who import clothes into the United States, the retail stores that sell those clothes, they say this tariff it just gets passed on to the consumers. It makes everybody's clothing more expensive.
And economists, they'll agree with this. And they say that tariffs distort the economy. They make it less efficient. And so that tariff on clothes and fabric that's been in place for hundreds of years, it has been going away in recent decades. But it hasn't been going away all at once. It's been going way slowly, one country, one free-trade deal at a time.
GOLDSTEIN: And there are lots of countries that want free-trade deals with the U.S., so the U.S. uses that for leverage. For example, a few years back, we made a deal with Colombia - this was before the current deal - where we lowered our tariffs in exchange for them cracking down on the drug trade.
BLUMBERG: And this brings us to Bangladesh because there are lots of people who argue that one way the U.S., if they wanted to, could push for better working conditions and higher wages in Bangladesh is to offer the Bangladeshis a free-trade deal for clothes but only if they really do improve conditions for workers. So far, it doesn't seem like that's going to happen anytime soon.
GOLDSTEIN: So back at the Port of Miami, I head over to the shipping company office to find out one last thing - have our shirts been released by Customs? Are they going to enter the country duty free like we think, or are they going to get sent off to some room to go through a meat grinder?
UNIDENTIFIED WOMAN #2: What's the container number?
GOLDSTEIN: 782 - 782939.
UNIDENTIFIED WOMAN #2: 782...
BLUMBERG: You sound nervous. What, are you hiding something?
GOLDSTEIN: You know, I get nervous if I'm coming through customs with just, like, my own suitcase full of my clothes. And I've certainly never cleared 6,078 T-shirts through customs before. So...
BLUMBERG: From Colombia.
GOLDSTEIN: From Colombia in Miami. But, you know, to the lady who's helping me, this is just, like, the most boring thing in the world that she does all day long.
UNIDENTIFIED WOMAN #2: Everything's funny released.
GOLDSTEIN: So, basically, we're good to go.
UNIDENTIFIED WOMAN #2: Yes.
GOLDSTEIN: We're good to go duty free and bound eventually for you.
(SOUNDBITE OF SONG, "THE BORDER LINE")
GOLDSPOT: (Singing) I've been away so long. And father I don't know where I've gone. Time brought me here...
GOLDSTEIN: As always, we want to hear from you.
BLUMBERG: Hey, let's do one more plug for the site.
GOLDSTEIN: Buy a T-shirt.
BLUMBERG: (Laughter) npr.org/shirt.
BLUMBERG: They both go to the same place.
BLUMBERG: Anyway, planetmoney.com/shirt. You can pick up a shirt. You can also see all the things that we've been talking about. You can actually see pictures, videos of the people who made our shirts. It's really cool. I'm Alex Blumberg.
GOLDSTEIN: And I'm Jacob Goldstein. Thanks for listening.
(SOUNDBITE OF SONG, "THE BORDER LINE")
GOLDSPOT: (Singing) I was born on a border line and thoughts race through my mind. Items escape in the middle of the night and my heart and head collide. I was born on a border line, on the great divide.
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