Tariffs paid by American companies due to expiration of the GSP program are high and rising fast. Based on an analysis of new U.S. Census Bureau data, American companies paid at least $118 million in tariffs on products claiming GSP in April due to GSP expiration, eclipsing the (then) record $113 million paid in March. It’s important to note that March/April generally are not big import months. The $420+ million in tariffs paid in the first four months of 2022 due to GSP expiration are a massive 39% increase over the same period in 2021.
Between GSP expiration on December 31, 2020 and the end of April, companies paid at least $1.47 billion in extra taxes. Those figures are the absolute minimum: well over $200 million in tariffs have been paid on products that didn’t claim GSP but may be eligible for post-renewal refunds. Billions in extra tariffs certainly don’t help as the United States fights high inflation.
April was the costliest month of GSP expiration yet for a dozen states including Delaware, Florida, Illinois, Indiana, Maryland, Michigan, North Carolina, New Jersey, Ohio, Pennsylvania, Tennessee, and Virginia. The map below shows estimated tariffs paid for products claiming GSP by state.
Tariff costs associated with all GSP decisions – expiration, GSP loss due to CNLs, recent country reviews, etc – are much higher. Over the past 16 months, companies have paid about $3.4 billion in tariffs on products from the “GSP eligible list” from GSP-eligible countries (or ones that were until very recently).
By raising costs for American companies, those extra tariffs make China more competitive, increase inflationary pressures in the United States, and reduce GSP’s potential development impacts. Congress and the Administration are leaving a lot on the table in terms of what GSP could accomplish.
The graph below shows the “all-in” tariff costs of GSP decisions by state – and that the GSP details really matter. Renewal helps by refunding the expiration-only costs. The CNL Update Act – which 54 House Members just endorsed – would help restore GSP for some of those individual products and prevent others from losing GSP in the immediate future. Together, renewal with positive changes could reinvigorate talks with countries such India, Turkey, and Thailand related to reinstated GSP benefits. The U.S. can’t “offer” much to those countries while GSP remains expired.