A group of 17 national trade associations sent a letter to President Donald J. Trump today asking for a delay to the suspension of Generalized System of Preferences (GSP) benefits for certain products from Thailand. The new tariffs, set to take effect on April 25, would add tens of millions of dollars in new costs to American companies already struggling and laying off workers due to the COVID-19 pandemic and collapsing global demand.
“This is the worst possible time to impose new tariffs, particularly on products needed for COVID-19 response,” said Dan Anthony, Executive Director of the Coalition for GSP. “The extra taxes directly undermine the unprecedented steps taken by President Trump, his Cabinet, and Congress to support American companies and workers.”
The letter highlights products that would face new tariffs that could harm COVID-19 response. Among the products on the list are specialized laundry equipment used by hospitals and first responders, single-use footwear covers, pumps, compression materials, and plastic resins and other components used to make medical equipment.
“Hospitals use our specialty laundry equipment, such as barrier models that isolate clean and dirty sides to prevent the spread of diseases like Covid-19, while other machines are used to reduce cancer risks from firefighters gear,” said Bengt Bruce, President of B&C Technologies in Panama City Beach, Florida. “We have applied for a PPP loan but I worry new tariffs on washers, dryers, and parts from Thailand will raise costs for first responders and hurt our future manufacturing plans for Northwest Florida.”
The letter also notes that over 22 million American workers have filed for unemployment, many the result of government-mandated shutdowns to help slow the spread of COVID-19. In a recent survey of companies using the GSP program, over half had slowed or closed operations. One-third reported laying off, furloughing, or reducing hours for current employees, and that figure rises to half of all respondents when including companies that expect to take such actions in the immediate future.
“As a food service distributor, we are considered ‘essential,’ but the mandatory closure of schools, restaurants, hotels, casinos, and other major customers could cost us more than half our business during the crisis,” said Jeffrey Hamon, President of Schreiber Foods International, Inc. in Upper Saddle River, New Jersey. “We’ve implemented steep salary cuts to avoid furloughs and have applied for PPP loans, but new tariffs on Thailand right now would make a bad situation worse.”
Finally, the letter and company survey responses show how the new tariffs would undermine the Paycheck Protection Program (PPP), one of the signatures policy responses to the COVID-19 pandemic. Nearly all survey respondents that could face new tariffs on April 25 said they also had applied for PPP loans, but may be forced to divert funds from employees to tariffs. Because the loans are forgivable, the U.S. government in effect would be paying some of the newly imposed tariffs.
“Due to COVID-19, we have cut salaries company-wide, slashed hours for all hourly workers, and laid off employees,” said Andy Milk, Chief Operating Officer of Novica in Santa Monica, California. “Novica applied for the PPP to help get by, but we would need to put some of those funds toward tariffs if they are imposed on our Fair Trade imports from Thailand later this month.”
The tariffs will take effect on April 25 unless President Trump issues a proclamation to change the implementation date.