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 $98 million in November 2021. From January-November 2021, American companies paid at least $971 million in extra taxes due to GSP expiration. Those figures are the absolute minimum: companies have paid over $200 million in tariffs on potentially GSP-eligible tariffs that didn’t claim GSP (but may be eligible for post-renewal refunds).
The China/Section 301 diversion is real. So far in 2021, GSP imports are up 11% 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. The GSP Coalition submitted comments to the Ways and Means Committee in mid-December about how GSP renewal must be a part of any “China trade” conversation.
Imports into 40 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.
In November, companies in Florida paid almost $10 million – and over $1 million more than any previous month. The $615,000 in extra tariffs paid for products heading to Arkansas was about $150,000 higher than any previous month. GSP expiration costs have a direct, negative impact on American companies ability to remain competitive, particularly small businesses.
Surprisingly, expiration costs account for less than half of costs related to *all* GSP policy decisions. In the first 11 months of 2021, companies paid up to $615 million due to suspensions following country practice reviews for India, Thailand, and Turkey and $640 million in extra tariffs due to product-specific exclusions (including for those three countries). 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.