In late April, the United States suspended duty-free treatment for about 1/3 of Thailand’s imports under GSP. Lost GSP for Thailand cost importers up to $17 million in extra taxes from May to July; another burden for American GSP importers hurt by the Covid-19 pandemic and recession. New data suggests cloth face masks are the #1 product facing new tariffs – making the Thai GSP suspension an economic and public health failure.
In July alone, American companies paid over $275,000 on non-disposable cloth face masks from Thailand – and about $25,000 on other types of face masks – that face 7% tariffs without GSP. The next highest tariff line, certain off-road tires, faced a little over $200,000 in new tariffs due to lost GSP.
Such analysis was not possible until recent changes to how the United States reports import data for certain health-related products. Historically cloth face masks were reported in a catch-all “other made-up [textile] articles” category (HTS 6307.90.9889), but that catch-all category was subdivided into the following categories starting July 1:
- N95 Respirators Of Textiles (HTS 6307.90.9845)
- Respirators Of Textiles, Other Than N95 (HTS 6307.90.9850)
- Face Masks Of Textiles, Disposable (HTS 6307.90.9870)
- Face Masks Of Textiles, Other Than Disposable (HTS 6307.90.9875)
- Other Made Up Textile Articles (HTS 6307.90.9891)
Data show the old catch-all category of imports faced nearly $800,000 in tariffs in May/June – about 80% more than the next highest tariff line. And while we cannot know exactly how much of those tariffs were on masks, the July breakdown suggests it is a large majority.
Import trends clearly show tariffs from suspended GSP are hurting Americans, not Thais. While Americans are paying hundreds of thousands of dollars per month in extra tariffs, Thai exporters are shipping more than ever due to surging demand from Covid-19. It’s a lose-lose scenario for everyday Americans and for those that want to use punitive tariffs as leverage.
While the specific tariff costs for Thai masks couldn’t be known until recently, the potential costs were obvious before the GSP suspension took effect. In mid-April, 17 national associations asked the Trump Administration to delay implementation of the GSP suspension. The letter warned that the move “could undermine COVID-19 response directly” and “the United States should not reduce sourcing options or raise costs for potentially important products.”
Recognizing that higher tariffs for face masks would hurt Americans, the Trump administration suspended Section 301 China tariffs on these products in March. The Administration similarly could reinstate GSP benefits for Thailand, or it could continue harming Americans by imposing punitive tariffs on needed items.