A simple statement from a GSP importer that shows why GSP reauthorization must be a part of any “China competition bill” like the one that House Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer hope to pass in July. Yet with the clock ticking until August recess – and then November elections – there is growing concern that trade provisions may be dropped so the rest of the package can advance.
It is one thing for policymakers to *say* U.S. companies buy less from China, but actual sourcing shifts require *actions* to help them do it, such as renewing GSP. The quote above comes in response to our new survey. The company imports travel goods such as plastic-sided bags that face extra tariffs of 20% due to GSP expiration. Here is the survey question and response.
Question: If GSP were renewed and all tariffs paid refunded immediately, which actions would you expected to take?
Answer: “We would return to working with non-China partners. The duty breaks allowed us to diversify production to less efficient markets. With respect to China, FOB pricing is lower and production is faster, plus shipping options are more available and lower cost. We cannot maintain relationships in GSP countries without the duty relief.”
Notably, imports from China face tariffs of 45% between the 20% “regular” tariff and 25% Section 301 tariffs. And yet buying from China is still cheaper, faster, easier to ship, and less expensive to ship. This is just one company’s response, but the national import data for their products clearly shows imports from China falling until GSP expired, and then rising again:
Lest anyone think it’s “just one company” or “just one product,” below are about 25 other examples where post-GSP expiration import growth from China stopped or reversed post-Section 301 tariff import declines.
If Congress is serious about a “China competition bill” and moving supply chains out of China, it must renew GSP, including CNL updates that allow companies to buy even more from non-China sources without being penalized.