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.

Lost GSP for India cost American companies an estimated $30.4 million in July, while lost GSP for Turkey cost them another $6.4 million. The impacts of the decisions are clear, as shown in the graph below. Before June, year-over-year GSP rose in 37 straight months.

GSP savings from other countries continued to grow, increasing $11.1 million (18%) from July 2018 to July 2019. Savings on imports from Cambodia grew by $8.1 million, from the Philippines by $2.7 million, and from Indonesia by $1.7 million

But growth from other countries was not able to offset the loss of GSP ineligibility for India and Turkey throughout the country: 41 states plus DC and Puerto Rico saw GSP savings decline from July 2018 to July 2019.

By value, the states with the largest year-over-year savings declines were New Jersey (-$3.4 million), New York (-$3.3 million), Florida (-$2.5 million), Texas (-$2.1 million), Michigan (-$1.3 million), South Carolina (-$1.1 million), Maryland (-$1.0 million), Kentucky (-$976,000), North Carolina (-$858,000), and Pennsylvania (-$852,000).

By percent, the states with the largest year-over-year savings declines were New Mexico (-87%), Louisiana (-78%), Vermont (-75%), Iowa (-72%), and West Virginia (-54%).

The large increases come despite the fact that July, August, and September savings appear significantly understated: official U.S. government data show no claimed GSP benefits for imports of travel goods from countries such as Thailand and the Philippines in July or August despite a recent program expansion. So not only is GSP program usage is booming, it’s likely that data on savings will be revised up considerably in the near future.

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

GSP saved Oklahoma companies $316,000 in September, up $126,000 (67 percent) compared to one year earlier. Taps and cocks and artificial plants from India, rubber hoses from Turkey, and ceramic wares from Indonesia contributed most to Oklahoma’s GSP savings increases.

GSP saved Florida companies $4.8 million in September, up $1.3 million (36 percent) compared to one year earlier. Tropical plywood from Ecuador, travel goods from Burma and Cambodia, and motor boats from South Africa contributed most to Florida’s GSP increases.

In addition to Oklahoma and Florida, companies in 21 other states saw GSP savings increase by at least 20 percent, including: Alabama, Alaska, Arkansas, Delaware, Iowa, Louisiana, Maine, Massachusetts, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Jersey, New York, Ohio, South Dakota, Texas, Virginia, West Virginia, and Wyoming.

Savings on GSP imports from Pakistan increased by 52 percent compared to September of last year. New York companies’ purchases of jewelry alone resulted in $179,000 in GSP savings. GSP eliminated about $500,000 in import taxes on valves in September, with about half of those savings coming from imports into Texas.

*** REMINDER: GSP EXPIRES IN JUST A FEW MONTHS.***

Please use our Contact Congress page to write your Members today about the need to renew GSP today. That page makes it quick and easy to email both Senators and your Representative. All you need to do is: 1) enter your contact info, 2) enter a few sentences about your company/GSP imports, and 3) click send.

• That is the highest reported monthly savings since October 2008.
• GSP imports were up by 17 percent – and tariffs savings were up by 21 percent – compared to August 2016.
• Year-to-date savings from GSP are up $72 million, or $9 million per month, over the first 8 months of 2016.

All that despite the fact that August savings are likely significantly understated: official U.S. government data show no claimed GSP benefits for imports of travel goods from countries such as Thailand and the Philippines in July or August despite a recent program expansion.

Put differently: GSP program usage is booming. Some states such as New Jersey and Texas saw much larger increases in GSP imports and savings compared to the previous year, as shown in the graphic below.

GSP saved New Jersey companies $7.4 million in August, up over $2.3 million (45 percent) compared to one year earlier. Travel goods from Burma and Cambodia, precious metal compounds from South Africa, and stone products from Brazil contributed most to New Jersey’s GSP increases.

GSP saved Texas companies $7.1 million in August, up over $1.7 million (32 percent) compared to one year earlier. Industrial machinery from Thailand, PET resin from Brazil, and stainless steel flanges from India contributed most to Texas’ GSP increases.

In addition to New Jersey and Texas, companies in 17 other states saw GSP savings increase by at least 20 percent, including: Alabama, Alaska, Delaware, Florida, Indiana, Louisiana, Maine, Michigan, Mississippi, Missouri, Montana, Nevada, Virginia, West Virginia, and Wisconsin.

Savings on GSP imports from Cambodia increased by 307 percent compared to August of last year. New York companies’ purchases of travel goods from Cambodia alone resulted in $740,000 in GSP savings. As companies gear up for the holiday season, GSP eliminated about $1.4 million in import taxes on Christmas lights in August, with over $250,000 of those savings coming from imports into Washington.

*** REMINDER: GSP EXPIRES IN JUST A FEW MONTHS.***

Please use our Contact Congress page to write your Members today about the need to renew GSP today. That page makes it quick and easy to email both Senators and your Representative. All you need to do is: 1) enter your contact info, 2) enter a few sentences about your company/GSP imports, and 3) click send.

Speaking at the U.S.-India Business Council today, Vice President Mike Pence said:

The trade relationship between the United States and India is flourishing.  It’s remarkable to think that not even 20 years ago, two-way trade between our nations was less than $20 billion per year.  But by the end of last year, it had grown by more than 500 percent to an annual $115 billion in trade; and U.S. exports to India now support roughly 200,000 American jobs.

But it is not just U.S. exports to India that support jobs. Duty-free imports from India under the GSP program support American companies, workers, and even exports. As shown in the infographic below:

• GSP benefits for India saved American companies $332 million from August 2015 to April 2017 alone – more than any other country;
• India was the most important source country for a majority of U.S. states in terms of GSP tax savings;
• Nearly half (!) of companies importing under GSP from India export some of those GSP-eligible goods – or products made from them – around the world,
• American companies benefiting from GSP for India are incredibly diverse, though the vast majority are small businesses.

Vice President Pence noted that “the truth is the United States and India we believe have only scratched the surface when it comes to bilateral investment and trade.” We agree, but it would be a mistake to overlook current win-win policies such as the GSP program.

Despite the slight overall decline, some states such as West Virginia and Nevada saw very large increases in GSP imports and savings compared to February 2016, as shown in the graphic below.

GSP saved West Virginia companies $91,000 in February, up $36,000 (65 percent) compared to one year earlier. Chemicals and mining tools from India and electrical conductors from Ecuador contributed most to West Virginia’s GSP increases.

GSP saved Nevada companies $330,000 in February, up $128,000 (63 percent) compared to one year earlier. Plastics accessories (e.g., wallets, glasses cases) from India, flourides (chemicals) from Thailand, and tungsten concentrates from Bolivia contributed most to Nevada’s GSP increases.

In addition to West Virginia and Nevada, companies in 10 other states saw GSP savings increase by at least 20 percent, including: Colorado, Connecticut, Delaware, Florida, Michigan, New Hampshire, New Mexico, Rhode Island, Virginia, and Wisconsin.

Savings on GSP imports from Kenya increased by 153 percent compared to February last year. New Jersey companies’ purchases of nuts were among the top GSP imports from Kenya. GSP eliminated about $265,000 in import taxes on gelatin in February, with about of those savings on imports from Iowa.

More monthly GSP import and savings highlights are on our Graphics page.

REMINDER: GSP expires at the end of 2017. Click here to learn about ways to take action and support GSP renewal this year.

• total GSP imports, tariffs savings, and average tariffs waived on account of GSP in 2016;
• companies importing GSP-eligible products;
• top GSP imports by product type;
• top GSP source countries by tariff savings, and
• the extent to which recent GSP expiration periods prevented “real-time” user benefits.

GSP usage differs greatly between states, from the types of products they import to the dependence on suppliers in specific countries. For example:

• Colorado companies saved $4.5 million on imports of about $60 million, meaning average tariffs waived of about 7.5 percent. That was about twice the U.S. average and nearly triple the 2.6 percent average tariff waived in Louisiana.
• North Dakota‘s imports under GSP in 2016 were primarily food products (56 percent), whereas West Virginia‘s imports were auto parts (44 percent). In most states, a single product grouping accounted for at least a quarter of GSP imports.
• Iowa is among the most concentrated states in terms of source countries, with 94 percent of GSP savings on imports from just three countries (India, Brazil, and Thailand) in 2016. Florida is the least concentrated state, with less than half of GSP savings on imports from its top three source countries.
• Idaho importers have paid tariffs on GSP imports more often than not: nearly 60 percent of tariffs waived on imports into the state since 2011 came when GSP was expired, meaning companies paid up front and “hoped for the best” regarding refunds. Conversely, just 33 percent of New Hampshire‘s tariff savings came during expiration periods since 2011.

All reports are available for download, along with other state-specific info, on the state reports page. A sample of the Kentucky report is below.

According to the Census Bureau’s 2013-2014 Profile of U.S. Importing and Exporting Companies, about 36,000 American manufacturers were importers in 2014. A separate table showed that 25,000 manufacturers were both exporters and importers. Put differently, nearly 70 percent of manufacturers that imported also exported products in 2014. So any efforts to raise the costs of imports are likely to drive up the costs of U.S. manufacturing, thereby making U.S. exports less competitive as well.

The GSP program helps demonstrate the importance of imports for manufacturers. In 2015, about two-thirds of all imports under GSP were raw materials, components and parts used to make other things in the United States. GSP waved over $400 million in taxes on those products – or about 60 percent of the total tariffs waived by the GSP program in 2015. By comparison, those same products account for just one-third of total U.S. tariffs collected (from all countries) in 2015.

For some states, basically all products imported under GSP in 2015 were raw materials, components and parts. For example, 99.7 percent of tariffs waived on imports into West Virginia in 2015 were for raw materials and parts. These included primary form plastics, chemicals, and transmission parts. Raw materials are parts accounted for 90 percent or more of the tariffs waived by GSP last year in several other states, including Wyoming, Louisiana, Michigan, Indiana, and Alaska.

When import costs are increased, such as when GSP was allowed to expire, American manufacturers (and their workers) suffer. For example, the new taxes associated with GSP expiration after one year forced Matrix Metals to lay off 75 workers in Iowa and Texas and prevented McGuire Manufacturing from replacing two full-time workers that left the small, Connecticut-based company.

Manufacturing jobs losses like those are completely avoidable. Eventually, Congress approved GSP renewal with big bipartisan votes in both the Senate and the House. Yet the false belief that imports must displace U.S. production fails to account for the fact that most imports, especially those under GSP, actually help make American manufacturers more competitive.

Raw materials, components, and parts have accounted for more than 70 percent of GSP imports since the program expired. Though industrial tariffs tend to be low, these products accounted for about 64 percent of the tariffs paid since GSP expired. Nationally, only a third of US tariffs collected during that period were on raw materials, components, and parts. Put differently, the burden of GSP expiration falls disproportionately on American producers.

Fortunately, policymakers get this. Before yesterday’s Senate vote on legislation that would renew GSP, Senate Finance Chairman Orrin Hatch noted that:

manufacturers and importers benefit by receiving inputs and raw materials at a lower cost. Approximately three-quarters of U.S. imports under GSP are raw materials, parts and components, or machinery and equipment used by U.S. companies to manufacture goods here at home. Unfortunately, because the program expired in 2013, these U.S. businesses have had to deal with high tariffs on these imports for the last two years.

If the national numbers sound impressive, then you’ll want to take a look at the chart below. In a few states, GSP importers use the program exclusively for raw materials and parts. In West Virginia, more than 99 percent of tariffs paid to date were on industrial supplies. In Louisiana and Alaska, it is more than 97 percent.

In value terms, Texas ranks first (or last, since additional taxes are bad) in tariffs paid for raw materials and parts because of GSP expiration. This is despite having paid significantly less tariffs than California or New Jersey on imports of all products. From August 2013 to March 2015, Texas companies paid an estimated $76 million in extra tariffs on raw materials and parts alone.

Fortunately for American manufacturers, the Senate took an important first step yesterday by overwhelmingly passing legislation that would renew GSP through December 2017 and refund most tariffs paid to date. The House of Representatives must pass identical legislation before American producers can once again enjoy duty-free benefits for key components. For manufacturers in many states, House action cannot come soon enough.

This post is part of the 4th Annual “Imports Work for America Week.“ For more information visit the Imports Work website.

Taxes paid range from a high of $134 million in California to a low of $153,000 in South Dakota. Even states with low(er) total taxes paid often bear the brunt for specific products. For example:

• South Dakota accounted for more than a third of taxes paid on wooden statuettes from Sri Lanka;
• Wyoming accounted for more than 80 percent of taxes paid on bone char imports from Brazil,
• West Virginia accounted for more than 80 percent of taxes paid on iron cores for ignition systems from Thailand.

This often reflects a single importer being hit with higher taxes on niche products. And they will continue to do so until Congress renews GSP.