The 2016 presidential elections have focused a lot on trade – and not in a good way. The remaining candidates on both sides of the aisle seem to be jockeying for the mantle of “Most Protectionist.” In current environment, it is more important than ever to speak about the benefits of imports as part of the 5th annual “Imports Work for America” week. And users of the Generalized System of Preferences (GSP) program have first-hand experience of the pain inflicted on American companies and workers by raising taxes on imports as candidates have suggested.
This was made evident by a September 2014 survey report showing that 13 percent of respondent companies had laid off workers because of GSP expiration, while 44 percent reported a hiring freeze. After two long years of GSP expiration – and stalled job creation – the renewal allowed American importers that rely on the GSP program to begin hiring again.
Take Fab-Line Machinery, a small business with facilities in St. Charles, Illinois and Nashville, Tennessee, that imports metal fabrication machinery from Turkey under GSP. GSP expiration forced Fab-Line to pay an extra $350,000 in taxes in one year and resulted in the laying off of one worker. Within two months of GSP renewal, Fab-Line had hired a new service manager and a new regional manager.
Similarly, Ferndale, Washington-based small business Kona Bicycle could not add any new employees while GSP remained expired. But once it was assured of renewal and refunds of tariffs paid during the nearly two-year expiration, Kona hired a senior engineer and an industrial designer. Kona moved so quickly to hire the workers that the GSP program had not yet gone back into effect!
Primetac, a family-owned small business in Little Ferry, New Jersey, also brought on new workers immediately following GSP renewal. Primetac hired a west coast sales manager and started the search for another representative in California. It not only has more employees – it is paying them better. After freezing pay for several years because of GSP expiration, all employees received raises in 2016. The company also undertook a number of capital investments – including a forklift purchase and a new LED lighting system for its warehouse – supporting yet more American jobs.
So while candidates take increasing tough anti-trade and anti-import positions, they would be wise to the recognize what happens policies raising import taxes are enacted: American jobs are lost, not created, particularly at small businesses. GSP expiration taught that lesson the hard way.
This post is part of the 5th Annual “Imports Work for America Week.“ For more information visit the Imports Work website.