We recently posted that GSP savings shattered previous records in October and that growth was strongest for products where the Trump administration has imposed new 10-25% tariffs on imports from China. One very clear example: Christmas lights, whose imports from China became subject to a 10% tariff on September 24.
For September/October, GSP imports of Christmas lights increased by $24 million compared to the previous year, while imports from China declined by $32 million. Similarly, the share of total U.S. Christmas light imports claiming GSP more than doubled to 19% in September/October 2018 from 9% during the same period in 2017.
Sourcing from GSP countries saved companies (and likely their customers) millions of dollars since they are not subject to either the 10% Section 301 tariff or the 8% MFN tariff that China already faced. Christmas lights make for a good example for a few reasons:
- Seasonal imports are concentrated from August-October, therefore shifts will have happened already (or may not be necessary until August 2019).
- Nearly all imports come from China (85% in 2017) or enter under GSP (12% in 2017), so there are few alternative sources to muddy trend analysis.
So what does a more detailed look at the data show? Imports under GSP jumped significantly – nearly double 2017 figures – in September and October:
And imports from China have dropped since tariffs were imposed:
Most interesting may be viewing the year-over-changes on the same graph:
Imports from China and under GSP were mostly unchanged in the first six months, and both rose in July and August as might be expected. But their paths diverged in September.
The $13 million increase in imports under GSP offset most of the $23 million decline in imports from China. In October, the $11 million increase in GSP imports more than offset the decline from China. That means for the two months combined, GSP increases offset about 75% of the decline in imports from China. (Overall tariffs on Christmas lights rose – A LOT – but GSP likely mitigated the increase by several million dollars.)
If you import from both GSP countries and China, or your GSP imports compete with those from China, please answer our new survey. We hope to collect information that could be relevant as the Administration reviews GSP-eligibility for major supplier countries such as India, Indonesia, Thailand, and Turkey.