Based on an analysis of new U.S. Census Bureau data, American companies paid $107+ million in extra tariffs in July due to GSP expiration – and $1.8+ billion in new tariffs from January 2021 and July 2022. Tariff costs resulting from GSP expiration are up about 40% in 2022, from an average of $80 million/month in the first 7 months of 2021 to $110 million/month this year.
GSP expiration directly undermines any efforts to use Section 301 tariffs for leverage with China. About 95% of the tariffs paid because Congress let GSP expire are for products that are subject to Section 301 tariffs if imported from China. They are the products where U.S. importers are most desperate to find non-Chinese suppliers, but GSP expiration makes those alternative suppliers less viable. Companies that moved from China to GSP countries feel punished for doing exactly what US policymakers wanted – and many report shifting imports back to China over the last year and a half as a result of Congress’ inability to renew GSP.
The “real” cost of GSP expiration to date is likely well over $2 billion. In addition to the $1.8 billion in tariffs paid that we know about, $400+ million in tariffs have been paid on products that may qualify for GSP but didn’t claim it. Some portion of those tariffs likely will claim GSP post-renewal. Plus, there’s likely another $125+ million in tariffs paid since August 1.
As the monthly tariff averages suggest, GSP expiration just keeps getting: imports into California have faced $500+ million in extra tariffs! July was the costliest month of GSP expiration yet for 10 states including Georgia, Illinois, Ohio, Washington, North Carolina, Minnesota, Massachusetts, Delaware, New Mexico, and West Virginia. Imports into 6 states have faced $100+ million in extra tariffs because Congress let GSP expire, and 36 more states (plus Puerto Rico) have faced at least $1 million in extra tariffs. The map below shows estimated tariffs paid for products claiming GSP by state.