• Top 5 states by tariffs paid due to expiration: California ($287 million), Florida ($98 million), New York ($80 million), Texas ($80 million), Georgia ($61 million)
  
  
• Top 5 states by highest average tariff paid due to expiration: Colorado (12.1%), Maine (11.0%), Wisconsin (9.3%), Montana (9.1%), Utah (9.0%)
  
  
• Top 5 source countries by value of GSP imports: Indonesia ($3.9 billion), Thailand ($3.3 billion), Cambodia ($2.7 billion), Brazil ($2.5 billion), Philippines ($1.9 billion)
  
  
• Top 5 source countries by value of (eventual) tariff savings: Cambodia ($268 million), Indonesia ($218 million), Thailand ($139 million), Philippines ($121 million), Brazil ($94 million)
  
  

Import growth in 2021 was massive. Total U.S. goods imports grew by 21%, while those from GSP countries grew by 35%. Yet “competitive need limitations” (CNLs), which lead to GSP loss for specific products, only grew by 2.6%. As a result, $1.8 billion of the currently eligible imports exceeded the 2021 CNL and another $1.5 billion likely will exceed the 2022 cap based on import levels and trends, putting a huge share of future GSP benefits at risk:

• Top 5 states by share of benefits at risk for exceeding the 2021 CNL: Mississippi (42%), Louisiana (26%), Florida (20%), New York (15%), Virginia (13%)
  
  
• Top 5 states by share of benefits likely at risk from the 2022 CNL: Maine (37%), Colorado (27%), Iowa (27%), Hawaii (19%), Michigan (15%)
  
  

Representatives Stephanie Murphy (D-FL) and Jackie Walorski (R-IN) introduced the bipartisan CNL Update Act (H.R.6171), which would amend the CNLs to grow more in line with historical trends. Not only would the CNL Update Act help preserve GSP for much of that “at risk” trade, it would help restore GSP for some of the $10 billion (!!!) in imports that lost GSP in the past due to product reviews:

• Top 5 states by potential GSP savings increase for products that “should” be restored by H.R.6171: Alaska (84%), South Dakota (72%), Michigan (41%), Maryland (38%), Mississippi (42%)
  
  
• Top 5 states by potential GSP savings increase for products that “may” be restored by H.R.6171: South Dakota (4,565%), Wyoming (218%), Maryland (213%), New York (196%), Minnesota (166%)
  
  

While the CNL Update Act has a chance to “preserve and restore,” there remains considerable down-side risk. The GSP renewal language in the House’s America COMPETES Act not only maintains the current CNL thresholds, but creates a high likelihood of full or partial termination for key GSP supplier countries, particularly Brazil, Cambodia, Myanmar, Philippines, and Thailand. Loss of GSP due to current CNL rules, combined with loss for those countries, would decimate the program:

• States where at least 90% of current GSP benefits are at risk: Wisconsin (-97%), West Virginia (-96%), Montana (-92%), Utah (-91%)
  
  
• States where at least 80% of current GSP benefits are at risk: Colorado (-88%), Connecticut (-86%), Arkansas (-85%), Hawaii (-84%), Wyoming (-83%), Maine (-83%), Alaska (-82%), Kansas (-82%), Mississippi (-82%), Texas (-81%), Indiana (-81%)
  
  
• States where at least 70% of current GSP benefits are at risk: Nebraska (-79%), Georgia (-79%), North Carolina (-79%), Michigan (-79%), Washington (-78%), Rhode Island (-78%), Nevada (-78%), Illinois (-77%), Alabama (-76%), New Mexico (-76%), California (-76%), Minnesota (-75%), Tennessee (-75%), Virginia (-74%), Massachusetts (-74%), Oklahoma (-74%), Kentucky (-73%), South Dakota (-72%), Florida (-72%), Oregon (-71%)
  
  

This last set of stats shows that GSP “renewal” can’t be the only priority. It must be renewed in a way that doesn’t decimate the program in the next 2-3 years. After all, it’s impossible to “promote development through trade” with a program that covers no trade.

The China/Section 301 diversion is real. So far in 2021, GSP imports are up 12% for products where Chinese imports face Section 301 tariffs but down 7% for products where Chinese imports don’t face any new Section 301 tariffs. It is impossible to know how much more GSP imports might be up (or Chinese imports down) if GSP expiration hadn’t forced American companies to pay tariffs for those products too. We wrote about how GSP renewal must be a part of any “China trade” conversation here.

Imports into 38 states (plus Puerto Rico) paid at least $1 million in tariffs due to GSP expiration. The map below shows estimated tariffs paid for products claiming GSP by state.

It is critical that Congress renew GSP – with refunds for tariffs paid – as soon as possible. We strongly encourage GSP importers hurt by expiration to answer our new survey here. As always, no company-specific details will be published without permission.

From January-August 2021, American companies paid at least $666 million in extra taxes as a result of GSP expiration. Imports into 36 states (plus Puerto Rico) paid at least $1 million in tariffs from January-July 2021 due to GSP expiration. The map below shows estimated tariffs paid for products claiming GSP by state.

August was the most expensive month of GSP expiration yet both nationally and for 15 states: Alabama, Delaware, Georgia, Hawaii, Idaho, Maryland, Minnesota, Montana, New York, North Carolina, Oklahoma, Pennsylvania, South Carolina, Texas, and Washington. Tariffs paid on imports into Minnesota were 84% higher than any previous month. For Pennsylvania and Georgia, tariffs paid were 53% and 27% higher than any previous month, respectively.

GSP expiration costs have a direct, negative impact on American workers:

• “GSP can be the difference between making a profit or a loss and without profits we obviously can’t increase wages and benefits” says Charlie Smith of BROSCO, a 4th generation, family-owned millwork distributor in Massachusetts and Maine. “Continued losses put all of our 360 workers’ jobs and livelihoods at risk.”
  
• “We are having challenges staying competitive“ says Ajay Kochhar of A&S Distributors in Salida, California. The 7-worker company has paid over $60,000 in extra taxes on food products from Fiji because of GSP expiration. “We can’t hire and give employees full benefits as this is a major increase.”
  
• “The tariffs when added to the rapidly escalating costs of containers have been devastating” says Sandra Colyer of Lily Koo LLC in Jamestown, North Carolina. “Employees laid off due to Covid are slowly being brought back, but return to work would occur more quickly if money was not being spent on tariffs.”

It is critical that Congress renew GSP – with refunds for tariffs paid – as soon as possible. We strongly encourage GSP importers hurt by expiration to answer our new survey here. As always, no company-specific details will be published without permission.

In the first six months of expiration, American companies paid at least $480 million in extra taxes as a result of GSP expiration. Companies in 34 states (plus Puerto Rico) paid at least $1 million in tariffs from January-June 2021 due to GSP expiration. The map below shows estimated tariffs for products claiming GSP paid by state in that period.

June was the most expensive month of GSP expiration yet for 12 states: Alabama, Colorado, Delaware, Iowa, Maine, Maryland, Minnesota, New Hampshire, Ohio, Oklahoma, Rhode Island, and South Carolina. For Alabama, Colorado, and Delaware, each new month has been the most expensive one yet (e.g., June was more than May, which was more than April, which was more than March…).

The data on tariffs paid is a conservative estimate, and the real figure likely is higher. Why? Estimates only capture products that continued to claim GSP despite expiration. Yet imports of many products that traditionally get GSP have not claimed it in 2021. Tariffs paid on those imports still would be eligible for refunds in the event of a retroactive renewal, but importers would need to file manual requests.

It is critical that Congress renew GSP – with refunds for tariffs paid – as soon as possible. We strongly encourage GSP importers hurt by expiration to answer our new survey here . As always, no company-specific details will be published without permission. Companies that want to help the Coalition for GSP educate policymakers on the importance of GSP should also join the Coalition for GSP and/or add their name to the free GSP supporter list.

GSP benefits have become even more important in recent years since Altus Brands completely stopped buying this product from China due to 25% Section 301 tariffs. In 2020, GSP saved Altus Brands over $25,000 in eliminated tariffs. The company’s imports also further GSP’s development goals: it purchases from a factory that offers benefits and higher pay than other local factories. It’s good for workers in the Philippines and the United States, since the high-quality products command a higher price and help support other Made in the USA product lines.

But GSP expiration threatens all of this. Altus raised prices to cover the $14,000 (and growing) in extra tariffs paid. It has lost sales at home and in export markets (e.g., Canada, Germany, and Russia), which in turn led to reduced purchases from the Philippines.

According to company president Gerand Lemanski, it could get worse yet: “Without renewal of GSP my product is not competitive in the US market and I will have to cease selling this product within a year. That will result in letting one production person go.”

Unfortunately, Congress recently recessed until mid-September. Altus Brands’ experience shows why it must make GSP renewal an immediate priority when it returns.

Note: this example came from a new Coalition survey on expiration impacts. It was published with permission. GSP importers are encouraged to take the survey here – no company-specific details will be published without such permission.

In the first five months of expiration, American companies paid at least $397 million in extra taxes as a result of GSP expiration. Companies in 32 states paid at least $1 million in tariffs from January-May 2021 due to GSP expiration. The map below shows estimated tariffs for products claiming GSP paid by state in that period.

May was the most expensive month of GSP expiration yet both nationally and for 19 states: Alabama, Colorado, Delaware, Georgia, Hawaii, Illinois, Kansas, Massachusetts, Minnesota, Mississippi, Missouri, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Pennsylvania, South Carolina, and Virginia. In three states – Colorado, Kansas, and New Mexico – tariffs paid in May were at least double any of the previous four months.

While many believe the United States has low tariffs, Colorado companies have paid extra tariffs averaging 11.7% due to GSP expiration. Companies in Maine, Montana, New Hampshire, Utah, and Wisconsin have all paid extra tariffs average 7-10%.

The data on tariffs paid is a conservative estimate, and the real figure likely is higher. Why? Estimates only capture products that continued to claim GSP despite expiration. Yet imports of many products that traditionally get GSP have not claimed it in 2021. Tariffs paid on those imports still would be eligible for refunds in the event of a retroactive renewal, but importers would need to file manual requests.

It is critical that Congress renew GSP – with refunds for tariffs paid – as soon as possible. Companies that want to help the Coalition for GSP educate policymakers on who is hurt by expiration (and how) should:

• join the Coalition for GSP
• add their name to the free GSP supporter list
• answer our very short survey on GSP expiration impacts to date

The products facing the most new tariffs vary greatly by state:

• In Florida, roses faced more than $1.8 million in new tariffs due to GSP expiration in the run-up to Valentine’s Day.
• In New York, gold jewelry faced more than $1 million in new tariffs.
• In Louisiana, over $600,000 in tariffs were paid on steel-making materials (likely by a company around the Port of New Orleans for distribution throughout the country).
• In Massachusetts, over $200,000 in tariffs were paid on leather sports gloves.
• In Pennsylvania over $160,000 were paid for rubber gloves. They were also the top products for tariffs faced in Connecticut, Mississippi, and Minnesota. Notably, while GSP countries face new tariffs, identical products from China continue to receive a Section 301 tariff waiver for public health reasons.

The $70 million in tariffs paid is a conservative estimate, and the real figure likely is millions of dollars more. Why? Estimates only capture products that continued to claim GSP despite expiration. Yet for numerous products GSP claims fell dramatically while imports continued or even grew. For example, more than $11 million of road wheels from Thailand (88%) were imported in January that didn’t claim GSP. Just 0.4% of those same imports didn’t claim GSP in January 2020. Camshafts and gelatin from Brazil, guitars from Indonesia, and bicycles from Cambodia similarly saw large values of unclaimed GSP imports in January 2021 when nearly all such imports claimed GSP in January 2020.

GSP expiration is already costing American jobs and raising prices for American companies that need inputs and consumers that purchase finished goods. It is critical that Congress renew GSP – with refunds for tariffs paid – as soon as possible. To help the Coalition for GSP educate policymakers on who is hurt by expiration (and how), companies are strongly encouraged to:

• write their lawmakers about GSP renewal with our Contact Congress tool
• join the Coalition for GSP
• add their name to the free GSP supporter list
• answer our very short survey on GSP expiration impacts to date

While California is far-and-away the #1 state for GSP savings, Texas edges it out for most tariffs paid this year due to country suspensions – companies in each state have paid up to $18.6 million in extra taxes. Companies in New Jersey are not far behind, having paid up to $18.2 million in extra taxes due to country suspensions.

The costs are driven by different Trump administration actions. Texas is the top state in tariffs paid due to India’s suspension, New Jersey has paid the most due to Turkey’s suspension, and California has paid the most due to Thailand’s partial suspension. The table at the very bottom shows tariffs paid, by country suspension and total, for all states.

Including the tariffs paid due to suspensions, both in 2019 and 2020, drastically changes the state savings trends. Instead of the sea of dark red states with declines of over 20% shown yesterday (and below, right), only a 5 states are likely to have seen such declines without country suspensions. Similarly, there would be savings growth for states in every region of the country instead of limited to the Mountain West.

Swings states, including big states not traditionally in play in Presidential or Senate elections, account for some of the biggest dollar swings. Without country suspensions:

• Texas companies’ savings would’ve increased up to $2.4 million instead of declining by $12.7 million, a $15+ million swing
• Georgia companies’ savings would’ve increased up to $3.1 million instead of declining by $5.8 million, nearly a $9 million swing

In more traditional swings states, maintaining full GSP eligibility for all countries would have mitigated declines likely associated with the Covid-19 pandemic. For example:

• Florida companies’ savings would’ve declined by $4.3 million instead of $12.6 million, an $8+ million swing
• Pennsylvania companies’ savings would’ve declined by $350,000 instead of $8.2 million, nearly an $8 million swing
• Michigan companies’ savings would’ve declined by $3.2 million instead of $8.2 million, an $5+ million swing

Swings were even bigger on a percentage basis in states where GSP savings are traditionally lower:

• Instead of declining by 47%, New Mexico companies’ savings would’ve increased by up to 161%, a 200+ percentage point swing
• Instead of declining by 60%, Minnesota companies’ savings would’ve increased by up to 17%, nearly an 80 percentage point swing

These are real costs to real American companies and workers – many in places that will be hotly contested in the 2020 elections – on top of the challenges related to the Covid-19 pandemic and economic fallout. In addition to congressional reauthorization of GSP, administration decisions to restore lost GSP eligibility would provide significant benefits to struggling American companies.

The top states by GSP savings have been fairly consistent over the years. California accounts for more than a quarter of GSP savings – about as much as the next 4 states (Florida, New York, Texas, New Jersey) combined. Washington and Tennessee have moved into the top 10 states in 2020, replacing Pennsylvania and North Carolina.

Savings are down sharply, from $555 million in 2019 to $407 million in 2020. The map below shows the widespread declines, with the Mountain West being a notable exception. Washington, Idaho, Wyoming, Utah, Colorado, and Arizona form a string of growth states from the Canadian to Mexican borders. Colorado’s savings increased over 150% from 2019, largely driven by a jump in backpack imports. Massachusetts is the only other state where GSP savings are up in the first half of 2020.

Savings declined by over 40% in more than 20 states, including a whopping 78% in Vermont. GSP savings also declined by 67% in Montana and Oklahoma, 63% in North Dakota, 61% in Michigan, 60% in Minnesota, and 52% in West Virginia.

Declines are NOT due to Covid-19. American companies have paid up to $183 million in extra tariffs in 2020 due to GSP suspensions for India, Turkey, and Thailand. In the first half of 2019, tariffs paid due to suspensions (India and Turkey only) were about $35 million. Add those potential savings to actual savings in both years, and the first half totals were nearly identical ($590 million) in spite of Covid-19-related declines. Our next post will dig into state-by-state costs in 2020 associated with the suspensions.

The impacts of the India and Turkey decisions are clear, as shown in the graph below. Year-over-year GSP savings regularly were growing by $10+ million per month. In fact, June marked the first time since April 2016 (37 months) that year-over-year GSP savings declined. The $15 million year-over-year drop was the largest decline in GSP savings since the 2008-2009 financial crisis.

GSP savings from other countries continued to grow, increasing $12.5 million (23%) from June 2018 to June 2019. Savings on imports from Cambodia grew by $7.3 million, from Indonesia by $3.0 million, from Thailand by $1.6 million, and from Burma by $1.3 million.

But growth from other countries was not able to offset the loss of GSP ineligibility for India and Turkey throughout the country: 39 states plus DC and Puerto saw GSP savings decline from June 2018 to June 2018.

By value, the states with the largest year-over-year savings declines were New Jersey (-$4.1 million), Florida (-$3.6 million), Texas (-$2.0 million), New York (-$1.2 million), Illinois (-$1.1 million), Louisiana (-$1.0 million), Michigan (-$942,000), North Carolina (-$882,000), Georgia (-$716,000), and South Carolina (-$512,000).

By percent, the states with the largest year-over-year savings declines were Louisiana (-88%), Nebraska (-82%), Vermont (-76%), Wyoming (-71%), Minnesota (-71%), Mississippi (-68%), New Mexico (-65%), Iowa (-62%), Arkansas (-60%), and Idaho (-54%).

In many of these states, declines were wholly attributable to lost GSP for India and Turkey, leaving little chance that savings will bounce back in July.