An (unfortunate) #TradeValentines:
Roses are red,
And were added to GSP in November.
But face high tariffs again
Since Congress let GSP expire in December.
One of the few bright spots for GSP in 2020 was the addition of roses to the list of GSP-eligible products as part of the 2020 annual product review. New duty-free treatment took effect on November 1, 2020, but was negated just 2 months later when Congress let GSP expire on December 31.
Why was GSP for roses such a big deal? Ecuador is the second-largest supplier of fresh cut roses to the United States (behind Colombia), yet faced 6.8% tariffs because they were not eligible for GSP. American importers paid about $12 million per year in tariffs on Ecuadorian roses. But that’s based on an average import cost of about $3.25 per dozen roses, while the final retail price for fresh-cut roses can be 10-20 times higher. As a result, tariff costs to the general public – like people buying roses for Valentine’s Day – are likely many times higher as well.
Roses also helps show the fallacy that GSP expiration does not hurt as long as the eventual renewal refunds tariffs paid. Due to the importance of Valentine’s Day, imports of roses from Ecuador (and the world) spike in January/February. Those two months generally account for about 1/3 of total annual imports. If florists must charge more today because of GSP expiration – and sell less flowers as a result – they can’t make it up in some later month after Congress renews GSP. Lost sales are lost forever.
At a minimum, GSP expiration means Americans are paying more for Valentine’s Day roses at a time when everyone could use a little more brightness in their day.