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.

From January-July 2021, American companies paid at least $565 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.

July was the most expensive month of GSP expiration yet for 12 states: Georgia, Hawaii, Iowa, Kansas, New Hampshire, Rhode Island, South Carolina, Utah, Vermont, Virginia, Washington, and Wisconsin. In Rhode Island, tariffs costs in July were more than the previously three months combined. Tantalum metals used primarily to manufacture electronic components from Kazakhstan and Christmas lights from Cambodia – the two products driving the Rhode Island increase – show the diverse impacts of GSP expiration.

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.

California accounts for more than a quarter of GSP savings, more than the next 3 states – New York, Florida, Texas – combined. Georgia, New Jersey, Ohio, Illinois, Washington, and Pennsylvania round out the top 10 states for GSP savings in 2020.

Estimated GSP savings for Colorado grew from $4 million in 2019 to $14 million in 2020, by far the largest increase. Estimated GSP savings also grew in Wisconsin (+$869,000), Arkansas (+$478,000), Washington (+$300,000), Delaware (+$73,000), and Wyoming (+$34,000). Estimated savings fell in all other states.

While Covid-19 had big impacts on GSP imports in the spring, declines were largely due to country suspensions. Excluding products impacted by country suspensions (e.g., India, Turkey, Thailand), most states’ GSP savings grew. For example, New York’s GSP savings grew by $15 million on non-impacted products but fell by $2.5 million overall due to country suspensions. Similarly, Texas’ savings GSP by $9 million on non-impacted products but fell by over $7 million overall.

Since GSP expired on December 31, American likely have paid about $110 million in tariffs that previously would’ve been “GSP savings.” 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:

• 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

For many years, TRI’s GSP savings funded multiple full-time salaries. Despite loss of GSP for products imported from India and Turkey, GSP “still saves our company the equivalent of more than a full-time employee’s annual salary.”

Watch TRI Executive Vice President and CFO Jeff Wright explain how “maintaining full employment, full wages, and employee benefits is our top priority as is supporting our US customers who are trying to do the same for their American workers” – and how GSP renewal would help them do it.

If you’re a GSP importer, submit your own video testimonial here.

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.

Kicking India and Turkey out would cost American companies over $300 million annually in new tariffs paid. But in the case of India, it also could lead to (technically unrelated) new tariffs on US exports.

India repeatedly has delayed implementing retaliatory tariffs on US exports in response to US Section 232 steel and aluminum tariffs, despite notifying the WTO of its intent to do so last May. Top US exports on the list include apples, almonds, and chemicals. It has been understood that delays were tied to ongoing US-India talks over GSP and other trade irritants. Tariffs currently are scheduled to take effect on May 2

Indian press has reported that tariffs likely will be delayed again – at least for a little while. “India may not wait till May 15 for imposing the retaliatory duties but may come up with a separate notification for immediate implementation” if GSP benefits are terminated in the interim.

Based on 2018 trade data, the tit-for-tat escalation could lead to nearly $500 million in new tariffs on two-way, US-India trade. The table below shows the state-by-state breakdown.

Some states clearly would be hurt more by tariffs on imports: Georgia, New Jersey, Florida, Virginia, Texas. Others clearly could be hurt more by new tariffs on their exports: California, Washington, North Carolina, Alabama.

Of course, all the tariffs likely could be avoided if the President does not issue a proclamation terminating GSP benefits for India, as has been requested by over 430 US companies and associations, 25 associations; and Senators John Cornyn and Mark Warner.

Sometimes the best course of action is no action at all.

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.

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 overwhelming approved GSP renewal legislation (HR 4979) but a vote of 400-2. The statements in support of GSP renewal were as strong as the final vote. Several Members highlighted how GSP savings can help companies lower costs, hire workers, and invest in their businesses and employees:

Ways and Means Chairman Kevin Brady (R-TX): “In Texas alone, our local job creators saved more than $76 million. Of course, this is money that our businesses can instead use to hire more workers, expand, and innovate. But think about what it means for families.”

Rep. Ralph Norman (R-SC), who helped spearhead last October’s House letter urging GSP renewal: “In 2017, producers in my state saved $17 million on GSP imports through reduced tariffs. There savings translate directly to how much companies can reinvest in their businesses and their employees.”

Rep. Jackie Walorski (R-IN): “GSP helps American manufacturers both big and small cut input costs, which in turn lowers prices for consumers. Companies saved $865 million in import duties in 2017 alone.”

Other went further and highlighted specific companies that would benefit from GSP renewal, including GSP supporter list companies TRInternational and Kona Bicycle in Washington, Primetac in New Jersey, and TopFlite Mfg. in Florida.

Ways and Means Trade Subcommittee Chairman Dave Reichert (R-WA): “In my home state of Washington, GSP saved companies about $11 million in import duties in 2017 — up 30 percent from 2016. 

As just one example, TRInternational, a small but quickly growing veteran-owned chemical distributor in Seattle, relies on GSP to obtain certain chemical raw materials at globally competitive prices.  Our last renewal of GSP in 2015 allowed TRI to hire more employees and increase its capital expenditures.  Many of TRI’s customers are U.S. manufacturers, and TRI’s use of GSP to obtain raw materials at lower prices also makes these manufacturers more competitive. 

For TRI, and for other Washington companies like Kona Bicycle that use the GSP program, their employees, and American consumers, GSP provides significant benefits.”

Ways and Means Trade Subcommittee Ranking Member Bill Pascrell (D-NJ): “Since the expiration of the program, small and medium-sized enterprises have borne the burden of higher costs of products imported under the GSP program.

Consider Primetac, located in Little Ferry, New Jersey, a family-owned business from my district that uses GSP-eligible goods to support their industrial packaging business. When GSP last expired, Primetac was forced to raise prices to compensate for new import taxes. This was no small increase, as the company estimates it paid about $1.5 million in new tariffs during the program’s lapse.

This legislation would provide benefits retroactively to GSP-eligible imports, so that small and medium-sized American companies like Primetac can take full advantage of the benefits of GSP and boost their business’s productivity. It is critical that we act quickly to renew this already expired program to support these firms and their employees.”

Rep. Carlos Curbelo (R-FL): “In 2017, U.S. importers enjoyed nearly $865 million in savings on import duties under the GSP program. During the same year, my home state of Florida had $1.2 billion of imports covered by the program and a total of $59 million in savings on import duties—Mr. Speaker, that’s about a 40 percent increase in savings from 2016.

I want to share the story of Mr. Bruce Price, a small business owner in my district who would benefit from renewing the GSP program. He recently told my office that he expects savings in the range of $25,000 to $45,000 per year if the program is renewed. For Mr. Bruce, that amount of savings goes a long way and makes a major difference in his business decision to hire more workers or hold off.

I commend the work that the Ways and Means Trade Subcommittee has done to reinforce our commitment to free and fair trade partnerships around the world. I urge my colleagues to vote in favor of H.R. 4979 to help Mr. Bruce and other small business owners hire more workers.”

Clearly, Members of Congress want to know about the companies impacted by GSP and its expiration. As the GSP Coalition continues to advocate for swift, retroactive GSP renewal, we strongly encourage companies to sign up for our free GSP supporter list and answer our expiration impacts survey.