• 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.

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 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 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.

Even before upward revisions, U.S. companies’ tax benefits from GSP showed massive increases from past years: American companies saved nearly $20 million per month more in 2017 because of GSP compared to just two years earlier.

Through the first half of 2018, GSP savings are up an additional 18 percent and on track to crack $1 billion for the year. While Congress renewed GSP through 2020 to give companies the certainty necessary to encourage such growth, the Trump administration has launched a number of country “eligibility reviews” that could raise taxes for American companies that depend on GSP – by a lot.

There are GSP reviews underway for India, Indonesia, Kazakhstan, Thailand, and Turkey. American companies saved $544 million last year due to GSP for those countries. Collectively, they accounted for 61 percent of GSP savings on imports from all countries.

Given the risk of lost GSP, we strongly encourage companies importing from those countries to sign up for our GSP supporter list and take our review impacts survey, which are both free.

In terms of specific revisions based on the new data, New Jersey saw the biggest jump in savings by value, followed by Florida, California, Georgia, and New York.

Montana saw the biggest jump in GSP savings by percent, followed by Utah, Maine, Florida, and Nevada.

For supplier countries, the largest revision in US savings came on imports from the Philippines, followed by Indonesia, India, Thailand, and Brazil.

In the first two months of 2018, companies paid $145 million. That includes only products that claimed GSP despite the expiration. Companies have until September 19 to claim refunds manually, so actual refunds paid for January-February likely will be higher than $145 million.

GSP imports were up by 8 percent compared to February 2017. Had companies not been forced to pay them, tariff savings would have increased by 17 percent. Arizona and Utah were among the states with the biggest increases in tariffs paid because of expiration, as shown in the graphic below.

GSP expiration cost Arizona companies $422,000 in February. Potential savings were up $238,000 (130 percent) compared to one year earlier. Chemicals from India, fashion accessories and conveyor belts from Thailand, and tires from Indonesia contributed most to the increases.

GSP expiration cost Utah companies $313,000 in February. Potential savings were up $120,000 (62 percent) compared to one year earlier. Bicycles from Cambodia and travel goods and compressor pumps from the Philippines contributed most to the increases.

In addition to Arizona and Utah, companies in 20 other statessaw potential GSP savings increase by at least 20 percent, including: Alaska, California, Colorado, Florida, Georgia, Idaho, Indiana, Kansas, Maine, Maryland, Mississippi, Missouri, Montana, Nebraska, Nevada, New Jersey, Oregon, South Dakota, Washington, and Wyoming.

Potential savings on GSP imports from Ukraine increased by 195 percent compared to February of last year. Chocolate products into Pennsylvania accounted for nearly a third of imports from Ukraine. Companies paid about $1.1 million in tariffs on plywood, led by importers in Florida.

*** REMINDER: GSP GOES BACK INTO EFFECT APRIL 22 BUT PRODUCT- AND COUNTRY-SPECIFIC BENEFITS MAY BE AT RISK AS PART OF ADMINISTRATIVE REVIEW PROCESS.***

While GSP has been renewed through 2020, we encourage GSP program users to sign up for the free GSP Supporter List to receive periodic updates on such issues such as refunds and the Annual Review process.

By comparison, the most tariffs paid in a single month during the last 2-year expiration was “just” $61 million. So the stakes for a swift, retroactive renewal are much, much higher for American companies this time around.

GSP imports were up by 18 percent compared to January 2017. Had companies not been forced to pay them, tariff savings would have increased by 21 percent. Montana and South Carolina were among the states with big increases in GSP imports getting slapped with new tariffs, as shown in the graphic below.

GSP expiration cost Montana companies $46,000 in January. Potential savings were up $38,000 (514 percent) compared to one year earlier. Travel goods from Philippines and fishing lures from Cambodia contributed most to the increases. As noted recently, Montana Fly Company in Colombia Falls had to lay off 3 workers due to higher tariffs associated with GSP expiration.

GSP expiration cost South Carolina companies $1.8 million in January. Potential savings were up $607,000 (49 percent) compared to one year earlier. Plastic resins from South Africa, motorcycles from Thailand, and plaited goods (baskets, wickerwork) from India contributed most to the increases.

In addition to Georgia and North Carolina, companies in 19 other states (plus DC and Puerto Rico) saw potential GSP savings increase by at least 20 percent, including: Alaska, Colorado, Delaware, Florida, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Missouri, Nebraska, Nevada, New Jersey, New Mexico, Texas, Vermont, Virginia, and Wyoming.

Potential savings on GSP imports from Tunisia increased by 115 percent compared to January of last year. Maryland companies alone imported $3.4 million in olive oil claiming GSP in January. GSP would’ve eliminated about $1.2 million in import taxes on monumental and building stone in January had it been in place. Illinois was among the largest importing states.

*** REMINDER: GSP EXPIRED EFFECTIVE JANUARY 1.***

The House passed GSP renewal legislation in February, but the Senate must pass legislation for GSP benefits to resume. Please use our Contact Congress tool to write your Senators about GSP renewal; answer our brief survey on how GSP expiration impacts you, and/or sign up for the free GSP supporter list to show the broad support for renewal.

Some states such as Georgia and North Carolina saw much larger increases in GSP imports and savings compared to the previous year, as shown in the graphic below.

GSP saved Georgia companies $3.9 million in December, up $1.3 million (49 percent) compared to one year earlier. Metal products from Brazil, luggage from Thailand,  and chemicals from India contributed the most to Georgia’s GSP savings increases.

GSP saved North Carolina companies $2.0 million in December, up $577,000 (39 percent) compared to one year earlier. Chemicals from the Philippines, furniture fittings from Thailand, and wood products from Indonesia contributed most to North Carolina’s GSP increases.

In addition to Georgia and North Carolina, companies in 26 other states saw GSP savings increase by at least 20 percent, including: California, Connecticut, Florida, Idaho, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Minnesota, Missouri, Montana, Nebraska, Nevada, New Jersey, Ohio, Oklahoma, South Carolina, Tennessee, Texas, Utah, Virginia, Washington, and Wyoming.

Savings on GSP imports from Indonesia increased by 31 percent compared to December of last year. California companies’ alone imported $4.6 million in silver jewelry under GSP in December. GSP eliminated about $1.5 million in import taxes on mangoes and guavas in December. About two-thirds of those savings were on imports into New Jersey.

*** REMINDER: GSP EXPIRED EFFECTIVE JANUARY 1.***

The House passed GSP renewal legislation in February, but the Senate must pass legislation for GSP benefits to resume. Please use our Contact Congress tool to write your Senators about GSP renewal; answer our brief survey on how GSP expiration impacts you, and/or sign up for the free GSP supporter list to show the broad support for renewal.

Last week, the House passed GSP renewal legislation by a vote of 400-2. Though Senate procedural rules make a stand-alone vote in the Senate unlikely, the expected result would be similar. (The last Senate vote was 97-1.) Despite overwhelming support in the House and Senate – and Administration support for a 3-year renewal – American companies and workers continue to suffer while waiting for GSP renewal.

Take Montana Fly Company (MFC) in Columbia Falls, Montana, a town of about 5,000 people between Flathead Lake and Glacier National Park. MFC imports artificial fishing flies from Cambodia that face tariffs of 9% without GSP. High tariff rates mean high expiration costs for MFC, which generally saves between $10,000 and $20,000 per month from GSP. Adam Trina, MFC Founder and President, had this to say about the lapse in GSP benefits:

GSP expiration immediately impacted Montana Fly’s business. Fishing season is over and as a seasonal business, cash flows are extremely important. All resources must go toward daily operations and the building of inventory for the following season. We laid off 3 workers here in Montana, one from higher-level management and 2 mid-level employees. We also had to let go 8 people in Cambodia.

We need to find more areas to cut as our total duty in 2018 will be around $200,000. Due to the duration of the previous GSP expiration, we can’t afford to wait around hoping GSP renewal will get passed, so we have taken and are taking immediate action. 

For MFC, which had 27 US employees in late 2017, the layoffs represent about 10% of its workers. Large companies may have the financial resources to absorb tariff costs while waiting for Congress to act, but that is not feasible for small businesses like Montana Fly. It simply isn’t possible to come up with $10,000 to $20,000 a month without cutting back significantly in other places, such as as payroll.

The longer Congress waits to act, the more uncertainty and disruption it causes for companies and workers alike.

Is GSP expiration similarly impacting your company? If so, let us know how by completing this form. As always, no company-specific information will be published without explicit permission.

GSP savings exceeded $1 million for 41 states plus Puerto Rico. Even without the expected upward revisions, more than 80% of U.S. states saw GSP savings grow over 2016. The map below shows the overall value of 2017 GSP imports (in blue) and tax savings (in red) by state.

Increased GSP savings were both large and widespread:

• New Jersey, Texas, and California each saw GSP savings jump by about $19 million, followed by a $17 million increase in Florida and a $11 million increase in New York.
• Savings more than doubled for Louisiana, Nebraska, and Delaware, while savings for Montana increased by 80% and savings for Alabama, Maine, and New Hampshire all increased by over 40%.

Some of these states (New Jersey, Nebraska, Florida, Maine, New Hampshire) are among the biggest beneficiaries of the travel goods expansion, meaning they also may see some of the largest upward savings revisions.

However, GSP expiration means American companies that have thrived in recent years are now being hit with millions of dollars in tariffs every day. Companies that import under GSP are strongly encouraged to join the GSP Supporter List and answer our survey on GSP expiration impacts.