Welcome to Renew GSP Today

Thanks for stopping by to check out our website about the GSP trade program.  Despite a “long-term” renewal in 2011, the GSP program expired on July 31, 2013. As a result, American companies now face an estimated $2 million per day in new taxes.

If you’re one of those companies paying higher taxes, be sure to get engaged in GSP renewal by:

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Waiting on a $468 Million Tax Day Refund

Tax day. For some that means refunds and others it means cutting a check to Uncle Sam. For GSP importers, it means another $1.8 million in higher import taxes (in addition to corporate taxes, income taxes on wages, etc.) because Congress failed to renew GSP.

These companies are desperately hoping – praying, really – that Congress will renew GSP retroactively so those extra import taxes are refunded. As of today, American companies are waiting on $468 million in tax refunds – and that number grows every day.

Why should Congress care about refunding those taxes? While TD Ameritrade says many people expect to save their personal refund, GSP importers plan to spend refunded tariffs on everything from new inventory to new warehouses to new workers - and sometimes all three! For example, in response to a follow up question to our recent survey:

  • an Oregon company said that “if renewal refunds are paid, we would use the money to further grow our business in terms of investing in inventory and equipment for growth and thus our need for additional employees.”
  • the owner of a company in Ohio said that “we would use these funds to increase our building size and add workers. Approximately 12-15 workers.
  • Minnesota company that has paid nearly $800,000 in unexpected taxes said it planned to “open Los Angeles, Northeast and Northwest locations, resulting in 6-10 jobs, all exceeding $50,000 per annum in salary.”
  • a jewelry manufacturer in California said a tax refund would allow the company “to recover approximately $50,000 in duties paid on a pass-thru basis to our vendors. This would allow the hiring of 2 additional personnel to assist in our production department.”

In some cases, this includes re-hiring staff that were laid off as a direct result of GSP expiration. For example:

  • a small business in New York said a retroactive renewal would “allow us to re-hire laid-off staff members and proceed with our planned warehouse expansion and purchase.”
  • a company in Texas said that with a tax refund “we will be able to hire our sales force back.”

Of course, companies do not expect to grow as long as GSP remains expired. One company response summarized the situation perfectly:

“If GSP renewal refunds all tariffs paid to date, my company would be able to retire debt and improve cash flow. With improved cash flow we can return to focus on sales growth. Sales growth would result in increased salaries for current employees and enable us to hire on additional staff. Less debt and better cash flow would also result in more income and therefore more tax revenue for the federal government. It would be good for my company and the country.”

Now they just need Congress to act.

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GSP Expiration Cost American Companies $48 Million in February

According to new data released last week, American companies “claimed” GSP for about $1.45 billion worth of imported products in February. Typically, those products would not face import tariffs because of GSP, whereas those same products imported from a non-GSP country like China would face $48.2 million in import taxes. Since Congress still has not renewed GSP, companies were forced to pay those taxes.

From when GSP expired on August 1, 2013 through the end of February, the regular taxes on previously GSP-eligible imports exceeded $384 million. Imports destined for California alone faced tariffs of more than $57 million. But it’s not just companies in big states that are impacted by GSP expiration. Rhode Island, Delaware, and Hawaii were three of the nearly 40 states that faced $1+ million in higher taxes, as shown below. Continue reading

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NEW REPORT: The Real Impacts of GSP Expiration – How Higher Taxes and Lower Sales Hurt American Jobs and Investments

The_Real_Impacts_of_GSP_Expiration-Cover_ImageWhat happens when Congress allows GSP to expire? According to a new report published today by the Coalition for GSP, the combination of higher taxes and the resulting lost sales force companies to take a number of harmful actions, including layoffs, hiring freezes, benefit cuts for workers, and delayed investments.

The Real Impacts of GSP Expiration-How Higher Taxes and Lower Sales Hurt American Jobs and Investments is based on the survey responses of hundreds of companies in nearly 40 states that import under the GSP program. Among the key findings of the survey:

  • Small businesses are disproportionately harmed by GSP expiration
  • Nearly 80 percent of companies reported lost sales because of increased import costs
  • More than 30 percent of companies reported delaying hires and capital investments, both of which would help the US economy grow
  • More than 10 percent of companies reporting laying off workers and cutting existing benefits, both of which send the US economy backwards

Finally, the report provides specific examples for each of these impacts from more than 30 different companies. A copy of the report is available to download here.

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No April’s Fools Joke: Failure to Renew GSP Has Cost American Companies Nearly $450 Million

Today marks exactly 8 months since Congress allow GSP to expire. Yet while Congress delays, American companies and workers suffer. From last August until the end of January 2014 (the latest data available), GSP expiration cost American importers $336 million in higher taxes on a little more than $9 billion in imports.

So about $50 million in products claim GSP daily, but companies must pay the government nearly $2 million out of pocket to take possession of the goods. Every. Single. Day.

From August 1, 2013 to March 31, 2014? That works out to $444 million in higher taxes on $11.9 billion in imports. And it’ll be higher tomorrow.

Expiration causes numerous problems for importers. Attempts to offset the new costs frequently result in lost sales, as does the inability to keep as bring in as much inventory at the higher prices. Lower sales and less cash-on-hand force companies to make difficult decisions, often resulting in delayed investments, hiring freezes, benefits cuts, and even layoffs, as the preliminary results to our recent survey show. (Stay tuned, we’ll be releasing the final report based on 200+ responses soon.)

Even if Congress refunds taxes paid by renewing GSP retroactively, these other problems can’t be undone. Companies won’t get to re-bid a lost contracts and laid off workers won’t “retroactively” have jobs. Let’s hope Congress realizes that GSP expiration is no joking matter.

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Last Call to Answer GSP Expiration Impact Survey!

Today’s the last day to answer our survey on the impacts of GSP expiration. We have nearly 200 responses so far but would like that number to be higher!

You can see some of the preliminary responses here.

If you have not answered it yet, please do so here.

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GSP Expiration Survey: Preliminary Results

There has been a great response to our GSP expiration survey so far, with responses from more than 125 companies in 28 states.

Please add your responses here before the next Friday, March 21 if you have not completed it already.

In the meantime, we wanted to provide some highlights from responses to date. The below graph shows the share of companies that responded “yes” to the question: “Has your business experienced any of the following effects from GSP expiration?” 

GSP_Expiration_Impacts-03142014

Clearly, lost sales is most-frequently reported impact. Nearly three-quarters of respondents reported lost sales as a result of trying to increase prices. Almost half reported bringing in less product because it is not competitive with tariffs included. Here are some of the detailed responses:

  • Our new accounts division has seen almost a 30% reduction in acquisitions since the increase in our prices has been in effect.
  • Our [confidential] division is the primary importer under GSP and sales declined by over $2 million, whereas our other division that only imports minor quantities under GSP had a sales increase of $2.7 million. I would estimate that our [confidential] division would have had a 5% increase, or about $2 million, so total estimated loss of $4 million in sales.” And that is on top of $400,000+ in GSP tariffs paid!
  • We have incurred losses of at least $1.5 million in sales from existing clients as well as new clients who have expressed an interest to buy from us, but will not unless the GSP is renewed.  They simply will not pay the additional cost.

These lost sales and potential profits impact all aspects of the business. About one third of companies reported delayed capital expenditures, meaning GSP expiration impacts many companies that do not benefit from the program directly. Here are some of the detailed responses:

  • We are a manufacturer located in the City of San Francisco, home of the most expensive labor in the USA. Our competitors are located primarily in China and India. We need to continually invest in automation technology to maintain our competitiveness, so additional duty costs are a hindrance to our ability to maintain a viable manufacturer in our market.
  • Capital expenditures for accounting software and computer hardware have been put on hold. The accounting software expenditure delay includes both the cost of the software and the hiring of a consultant to install and implement.
  • $150,000 in investments for handling and storage capacity have been delayed until further notice.”

As far as direct worker impacts, more than 30 percent of companies reported delayed hires and about one in eight companies reported both worker benefits cuts and layoffs. Here are some of the detailed responses:

  • We laid off 8 people and have not hired replacements. There was no money for Christmas bonuses or 401K funding.
  • “We lost sales because our prices are no longer competitive. We were planing to hire 2 people by the end of last year but because of the GSP expiration that increased our cost, we had to forget about it.
  • The additional costs for duties has placed pricing pressure on our product offerings and our ability to remain competitive and profitable – so much so that our monthly sales have been negatively impacted by an average of about $100,000/mo. over the last 6 months. We have suspended plans on hiring about 3 additional employees who were intended to support the segment of our business associated with these imports.

About a quarter of companies reported “other” impacts as well, such as:

  • Reduced research and development. As one chemical company wrote: “The largest impact is that we have discontinued and reduced our product development work in various areas. Product development work is expensive. It requires purchasing development equipment, test equipment, technical people, sampling, etc.  The problem with doing this is that our life blood is being innovative and bringing value to our customers. If we stop, ultimately we lose our leadership role and thus can’t maintain our competitive advantage. And then the product will move to China.
  • Personal hardship for small business owners. “The $80,000 in tariffs paid could help my company deal with the severe winter issues. Right now I have more than $60,000 in credit card debt at a high interest rate.

These responses are just the start. Unlike tariffs paid, which Congress can refund with a retroactive GSP renewal legislation, Congress cannot turn back the clock to make up for lost sales, delayed purchases, or lost employee hours.

Stay tuned for more details from the survey and again, if you haven’t taken it already, please do so here.

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GSP Expiration Survey (Requested by Member of Congress)

A few weeks back, a number of companies and business associations had an in-district meeting with a Member of Congress that would like to become more engaged on GSP renewal. But first, this Congressman would like to learn more about the impacts of GSP expiration.

So we designed the following survey answer the Congressman’s specific questions about how companies are dealing with expiration. Please take a moment to answer this important survey.

All data will be kept confidential and no company-specific answers will be attributed unless you explicitly grant permission in a follow up conversation. If you have any questions, please contact Dan Anthony at the Coalition for GSP here .

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