GSP eliminated over $24 million in tariffs in 2019 on products directly related to Covid-19 response. Congress should renew GSP immediately to ensure continued GSP duty-free treatment for these critical products and provide certainty for American companies that are already struggling due to the coronavirus pandemic. GSP’s current authorization lapses on December 31 and past research shows companies may start placing orders soon for arrival after the expiration date.
The estimate is based on an analysis of GSP imports and tariff savings for products flagged in the USITC’s recent report COVID-19 Related Goods: U.S. Imports and Tariffs, which was requested by House Ways and Means Chairman Richard Neal and Senate Finance Committee Chairman Chuck Grassley. This is a narrow definition that likely discounts savings on a wide range of indirectly-related products, as made clear by responses to the Coalition for GSP’s Covid-19 survey (take the survey here, see results to date here).
Tim Smith, President of HIBLOW USA in Saline, Michigan, reported “98% of the air pumps we sell to American OEM’s for medical devices come from the Philippines.” Specific medical applications for HIBLOW’s pumps include respiratory devices, bariatric air mattresses, and immunity/ blood examination equipment. GSP eliminated several million in tariffs on air pumps in 2019, but the pumps themselves are not considered medical products in the USITC report.
Another respondent expects increases in their imports of acrylic plastics from Indonesia and Thailand in 2020. The plastics are used to make sneeze guards for supermarkets and retail locations, which are in high demand due to Covid-19. But again, acrylics are not really “medical” products and do not appear on the USITC list. GSP eliminated several million in tariffs on acrylic plastics in 2019.
The Covid-related product list also shows the harm from seemingly unrelated GSP decisions by the Administration.
GSP would have eliminated $31 million in tariffs in 2019 on the Covid-19 products if the Administration had not terminated eligibility for India and Turkey. Due to the decisions, American companies paid those $7 million in tariffs.
More recently, the Administration suspended GSP benefits for about 1/3 of imports from Thailand, including products on the USITC list such as safety goggles and textile articles. The decision went ahead despite warnings that the suspension list contained products related to Covid-19 response.
That’s right: in the middle of a pandemic the Administration chose to impose new tariffs on products deemed necessary to fight the pandemic.
Looking only at products still eligible for GSP today (i.e., no savings for products from India, Turkey, or on the Thailand partial suspension list), GSP savings for Covid-19 related products in drops to $17 million. Obviously the Administration did not eliminate GSP benefits with the intent of adding $14 million in tariffs annually to Covid-19 related products, but that is the practical impact of their actions.
If Congress wants to promote a cost-effective response to Covid-19, it should immediately extend GSP’s authorization and push to restore benefits that have been lost over the last year.