Last year we wrote about how roses were recently added to GSP – but expiration means more expensive roses for Valentine’s Day. Not surprisingly, imports of roses spike in January and February in preparation for the Valentine’s holiday. As Scott Lincicome tweeted: “Congress literally raised taxes on love. Happy valentine’s day.”
It’s not an insignificant cost: Ecuadorian roses faced up to $18 million in tariffs in 2021 due to GSP expiration. Like many products, imports rose throughout the year, so tariff costs for this Valentine’s Day likely will be much higher than last year. This has a big impact on the overall market since tariffs without GSP are 6.8% and Ecuador accounts for about 35% of total U.S. imports of roses. Put differently, GSP lapse has the same effect as adding 2.5% to the cost of all imports…and there aren’t too many U.S.-grown roses available in February.
But it could get worse still for Valentine’s Days-to-come: rising imports mean Ecuadorian roses surpassed GSP’s “competitive need limitation” (CNL) in 2021. If Congress renews GSP without updating its CNL rules – and there’s a bill that would do just that – permanent 6.8% tariffs could be applied to Ecuadorian roses on November 1.
Roses are far from alone in potential negative impacts from CNLs: nearly 20% of all GSP imports either exceeded the 2021 CNL cap or should exceed the 2022 cap based on import levels and trends. That’s because imports from GSP countries grew 35% in 2021 (versus 21% from all countries), and inflation was 7.5%, yet the CNL threshold grew by just 2.6%. Already, as much as 35% of potential GSP imports face tariffs due to these product-specific exclusions, further showing the need to update the rules as part of GSP renewal.
No one likes to pay more than necessary for beautiful roses. Congress can help spread the love by renewing GSP and updating the CNL rules as soon as possible.