It has been exactly 22 months since Congress let GSP expire. American companies paid at least $1.9 billion in direct tariffs – and as much $2.4 billion – through August 2022. Tack on the two extra months for which data aren’t available yet, and Congress’ failure to renew GSP resulted in up to $2.6 billion in added costs at a time when high and persistent inflation is the top economic challenge. A nasty trick indeed.
Congress has been treating GSP importers like Charlie Brown – given them nothing but rocks. It’s an amusing gag in the cartoon. But companies have had to raise prices on customers, shift sourcing back to China, cut wages and benefits, and laid off US workers. Some fear going out of business completely if Congress cannot provide relief soon. But Congress can provide treats when it returns to DC after the elections in two weeks. And like Halloween candy, there is not just one “treat” option.
Congress can be the house that gives full-size candy bars by passing a long-term GSP reauthorization including changes with broad, bipartisan support like the CNL Update Act. This would provide refunds of tariffs paid, provide the certainty needed to make investments for the next 3-5 years, and help restore duty-free treatment for many non-sensitive imports that lost GSP benefits based on hitting an arbitrary trade threshold 5, 10, or even 25 years ago. A long-term, robust GSP program is also the best hope for using GSP to raise standards in the United States and around the world.
But Congress could give out a “fun size” treat by passing H.R. 8906 and refunding most of those tariffs paid. It’s clearly not as good as a full reauthorization, but even candy corns are better than nothing. Small businesses in particular could use the refunds to avoid further price hikes, keep working with suppliers in GSP countries instead of finding lower-cost alternatives in China, or pay off debts that threaten to put them out of business altogether. Like the CNL Update Act, H.R. 8906 has (growing) bipartisan support as the least this Congress should do after after two years of “just rocks.”