Based on an analysis of new U.S. Census Bureau data released yesterday, expiration of the Generalized System of Preferences (GSP) program cost American companies at least $110 million in October 2021. Had congressional authorization for GSP not expired on December 31, 2020, it would’ve been the highest month of tariffs eliminated in the history of the GSP program. From January-October 2021, American companies paid at least $873 million in extra taxes due to GSP expiration.
The China/Section 301 diversion is real. So far in 2021, GSP imports are up 12% for products where Chinese imports face Section 301 tariffs but down 7% for products where Chinese imports don’t face any new Section 301 tariffs. It is impossible to know how much more GSP imports might be up (or Chinese imports down) if GSP expiration hadn’t forced American companies to pay tariffs for those products too. We wrote about how GSP renewal must be a part of any “China trade” conversation here.
Imports into 38 states (plus Puerto Rico) paid at least $1 million in tariffs due to GSP expiration. The map below shows estimated tariffs paid for products claiming GSP by state.
Surprisingly, expiration costs account for less than half of costs related to *all* GSP policy decisions. In the first 10 months of 2021, companies paid up to $560 million in extra tariffs due to product-specific exclusions and up to $550 million due to suspensions following country practice reviews for India, Thailand, and Turkey. Without such decisions, GSP could eliminate approximately $200 million in tariffs on $4 billion in trade per month.
It is critical that Congress renew GSP – with refunds for tariffs paid – as soon as possible. We strongly encourage GSP importers hurt by expiration to answer our new survey here. As always, no company-specific details will be published without permission.
