Last month, the United States Court of International Trade affirmed what grandmothers and binge watchers have known for years; Snuggies are blankets and not clothes. This cozy factoid seems insignificant until import tariffs are folded into the mix. Nestled in an extremely voluminous and riveting tome titled The Harmonized Tariff Schedule of the United States, are the various rates at which imported items will be taxed. Per the schedule, a blanket is taxed at 8.5 percent, while an item of clothing is subject to a 14.9 percent tariff. Clearly, an inattention to the classification of items could send quite a chill through importers’ pocketbooks.
In the suit, Allstar Marketing Group LLC v. the United States, Snuggie’s manufacturer successfully argued that the Snuggie’s classification as an “other garment, not made of cotton (e.g., graduation or priestly robes)” was incorrect, and that the item was much more akin to a simple blanket. The court agreed with plaintiff’s position and found that “the addition of sleeves is not so substantial so as to transform the Snuggie into something other than a blanket.” An attorney for Allstar Marketing Group, LLC estimated the company had sold approximately $500 Million in Snuggies, and paid almost $16 Million in import tariffs on the Snuggies it had sold. This case and others dealing with the assignment of import tariffs are relevant to all Americans as legislators seek new streams of revenue with which to warm up the economy.
It remains to be seen when or whether the Snuggie savings will make it from the court to the couch.