One of the first responses to our new survey on GSP and inflation came from Bueno of California in Fullerton, CA, which imports handbags, wallets, travel accessories, totes, and backpacks. The 20-person company has paid nearly $2 million in extra tariffs due to GSP expiration.
“We are getting killed between increases in factory prices, add-on of duty, and increasing freight costs” said President Joe Pagliaro. “We have been able to pass on some of the increases, but not nearly enough to run a sustainable business.”
Like many small businesses that cannot raise prices enough to cover tariffs associated with GSP expiration, Bueno has financed some of the costs while awaiting renewal. Yet rapidly rising U.S. interest rates increase those costs as well – something that refunds for tariffs paid will not cover. (We wrote about non-refunded interest payments way back in 2016.)
For Bueno, the ability to offer lower prices is key. “Our business is dropping because we can’t meet customer target prices even after lowering our margins to accommodate. If we lower prices we can increase our business and hire more workers” reported Pagliaro.
In summary, Pagliaro reported “Government policies since 2018 have unfairly hurt the handbag industry. We pay extra tariff for China. We lost GSP for Cambodia and India. The government’s inability to control inflation means our operational costs keep rising as our sales revenue and margins decline. The government needs to wake up or many ‘silent’ small and medium businesses like Bueno will be gone very soon.”
Congress can help by renewing GSP ASAP and including changes such as the CNL Update Act, which will ensure GSP countries remain viable sources for travel goods and other products. Congresswoman Young Kim, who represents Bueno’s headquarters in Fullerton, was among the 54 bipartisan House Members that endorsed the CNL Update Act’s inclusion in renewal.
If you’re a GSP importer, please help by answering the survey/sharing your story here. No company-specific information is shared without permission (which Bueno granted). Even if responses cannot be shared publicly, they help inform the Coalition for GSP’s conversations with policymakers about the importance of renewing GSP.