How The Case Of The 'Snuggie' Impacts Tariffs And Trade
DAVID GREENE, HOST:
You know the Snuggie? Keeps you warm, maybe you've seen it advertised on television. Well, the U.S. court of international trade made a lot of waves with a ruling handed down on the Snuggie and what it actually is. The court had to decide whether it's a blanket or a garment. And Kenny Malone from our Planet Money podcast wanted to know what kind of money's at stake when you say the Snuggie's a blanket.
KENNY MALONE, BYLINE: I was told Joe Spraragen's Manhattan office was, quote, "a real Snuggie scene," filled with dozens of the things. But as he walks me inside...
JOE SPRARAGEN: The last, I'm down to one.
SPRARAGEN: Yeah. Breaking open the Snuggie package.
MALONE: Spraragen is an attorney with Grunfeld Desiderio. And he helped represent the company that owns Snuggie, Allstar Marketing.
SPRARAGEN: Here we see one lovely brown Snuggie.
MALONE: It's a blanket-shaped thing with sleeves sewn into it. This one is a regrettable shade of camel but soft.
I'm just going to wear this for the rest of the interview if that's all right with you.
SPRARAGEN: I prefer the term use it, rather than wear it.
MALONE: Oh, I see what you're doing here.
He's saying the Snuggie's not a garment you wear, it's a blanket you use. This matters because the Snuggie is made in China. And everything that's imported into the United States may be subject to a tariff determined by what that item is. Typically, this gets sorted out pretty easily by a very long, very detailed law.
SPRARAGEN: Here we have the entire Harmonized Tariff Schedule of the United States - dropped on the floor.
(SOUNDBITE OF THUD)
MALONE: In here somewhere is a category and a tariff for everything - walking sticks, 4 percent - coffee, 0 percent - live foxes, 4.8 percent. Snuggie was falling under Section 6114.
SPRARAGEN: Other garments, knitted or crocheted, that are not of cotton.
MALONE: The Department of Justice declined to comment for this story. But it had argued that the Snuggie belonged in this category, like a priestly cloak or a graduation gown.
SPRARAGEN: Rate of duty of 14.9 percent.
MALONE: Spraragen argued that the Snuggie is clearly a blanket, which would mean a 6.5 percent lower tariff. And that is what the court decided - Snuggie is a blanket. That would mean big savings for Snuggie and a big tax loss for the government. Spraragen wouldn't say how much money was at stake, but Michael Cone was game to try and figure it out. Have you done this math already, or should I get my calculator out?
MICHAEL CONE: I did the math.
MALONE: Oh, OK.
Cone is a trade and customs lawyer who's worked on cases like this. As of 2013, Allstar Marketing had sold a reported $500 million in Snuggies. Cone says we can estimate they'd pay duty on about half that number. And then he did some math that I think sounds more complicated than it really is.
CONE: Multiply delta 6.4 percent times $250 million, which would be the landed dutiable cost. That equals $16 million.
MALONE: Sixteen million dollars - again, just an estimate.
CONE: So you can see the impact - the monetary impact - of a case like this that goes in front of the Court of International Trade.
MALONE: Cone says in theory this should result in lower Snuggie prices for consumers in the future. Which may come in handy because back at Joe Spraragen's office...
Boy, this Snuggie really heats up quick.
...He's hanging on to the Snuggie I've been wearing throughout our interview.
SPRARAGEN: I am retaining this one should the need arise for reference.
MALONE: And two final questions. Before this, how many Snuggies had you used?
SPRARAGEN: I had never used a Snuggie.
MALONE: And since this, how many Snuggies have you worn?
SPRARAGEN: I have never worn a Snuggie. And I don't believe anyone else has, either.
MALONE: I thought I might get you there.
SPRARAGEN: Spraragen says, look. Snuggie's been clear about its use from the beginning. For a decade, the company's been saying and singing one consistent message.
(SOUNDBITE OF AD)
UNIDENTIFIED MAN: (Singing) Snuggie, Snuggie, everyone agrees there's only one Snuggie, the blanket that has sleeves.
MALONE: Kenny Malone, NPR News.
(SOUNDBITE OF AD)
UNIDENTIFIED MAN: (Singing) Snuggie, Snuggie, everyone agrees. Transcript provided by NPR, Copyright NPR.