Earlier this week we heard from Custom Direct, Inc., yet another supporter list company urging Congress to pass a swift, retroactive GSP renewal. (Use these links to see the full list or add your organization.)
Based in Plano, Texas, Custom Direct is a US supplier of luggage, bags and cases with 10 employees. The company works with manufacturers in Cambodia that generally qualify for duty-free treatment under GSP. The company hasn’t paid any extra import tariffs due to GSP expiration, but the costs are quite real. According to Custom Direct’s CEO [emphasis added]:
We lost our largest project of the year, the opportunity to supply 2.5 million eyeglass cases to a major US customer as part of a Q-1 project. We were the successful bidder and awaiting the purchase order when we became aware that Congress had failed to renew GSP.
The duty on cases would have added 17.6% to our cost of goods which we could not simply “hope” to recoup some day if GSP were to be re-instated. We had no choice but to withdraw and the business went to a supplier in China instead. We are still in the running for Q-3, but without GSP allowing us to partner with a Cambodian manufacturer, the project will go to China again.
The loss of business made us delay plans to hire 6 people in Texas and adjust revenue forecasts downward. Our US warehouse subcontractor also delayed plans to hire additional American workers to handle marking and labeling, packing, and distribution of the eyeglass cases. We are a small business and the loss of such a large client is perilous to our bottom line.
Custom Direct is a textbook example of why even retroactive renewals that refund tariffs paid can’t “make companies whole.” There are no tariff refunds for sales that were never made – something we highlighted on Tuesday as well. The longer Congress allows GSP to remain expired, the greater the risk of major losses for companies like Custom Direct that must compete against suppliers in countries like China that are not impacted by GSP expiration.
Is GSP expiration similarly impacting your company? If so, let us know how by completing this form. As always, no company-specific information will be published without explicit permission.