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.

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

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.

*** Tariffs on GSP imports are scheduled to go up on January 1. By the time that feels “close,” it may be too late to make a difference in Congress. So if you import under GSP and don’t see your organization here, please add it here today. ***

The companies are based in 11 different states and most are small businesses (Panasonic North America certainly is not). Their imports are as varied as their locations: Engineered Components Company imports cap screws from Thailand; Galaxy Sports imports gloves from Indonesia; Global Chemcorp imports pigments and dyes from India, and Sugarpod Naturals imports dietary supplements from the Philippines.

Two companies – B&C Technologies and Fab-Line Machinery – are among those featured on our Company Profiles page.

The next potential GSP expiration is less than 9 months away. If you import under GSP, be sure to join our free GSP Supporter List so we can continue making the case for GSP renewal well in advance of the pending expiration date.

GSP Supporter List companies added the week of April 10, 2017:

• Andre Prost, Inc. in Old Saybrook, Connecticut
• B&C Technologies LLC in Panama City Beach, Florida
• Bolcof Port Polyers / Calsak Plastics in Azusa, California
• Engineered Components Company in Elgin, Illinois
• Fab-Line Machinery, LLC in Nashville, Tennessee
• Galaxy SPorts, Inc. in South Bend, Indiana
• Global Chemcorp, LLC in Charlotte, North Carolina
• Karran in Vincennes, Indiana
• Organik Kimya US, Inc. in Burlington, Massachusetts
• Panasonic Corporation of North American in Newark, New Jersey
• Sugarpod Naturals in Hillsboro, Oregon
• TRI-K Industries Inc. in Denville, New Jersey
• YGI Group in New York, New York
• Zhong Ya Chemical (USA) Ltd. in Edison, New Jersey

Select artisans in India working with GSP importer WorldFinds

While we generally focus on the benefits to U.S. companies of the GSP program, it is important to remember that sourcing from GSP countries has a positive impact on the lives of workers and their families in developing countries. Sometimes, the benefits to poor workers come simply from having a job that otherwise would not exist without the additional U.S. demand created by GSP. Often times, though, U.S. companies importing under GSP choose to go above and beyond in terms of promoting development.

For example, Preferred Brands International in Stamford, Connecticut imports ready-to-eat food products from India. The company cares about more than just increasing sales of its Tasty Bite brand foods: it uses its 23-acre farm in India as a demonstration location to teach best practices in organic and sustainable farming and has a number of community initiatives such as a scholarship fund for factory workers’ children.

Similarly, Nina Designs in Emeryville, California imports fair trade jewelry from multiple GSP countries. This small business has funded $115,000 in microloans to more more than 150 women artisans in 20 developing countries, most of which are GSP beneficiaries. One of the company’s microloan partners is Novica (also on the GSP Supporter List), which has sent more than $68 million to artisans around the world. Nina Designs’ commitment to employees is simply inspirational.

The examples of the companies above run counter to what nearly all trade critics think about imports from lower-wage countries. While GSP and programs like it help make such development possible, they are not guaranteed. For example, WorldFinds in Westmont, Illinois paid $6,000 in extra taxes in the first month after GSP expired in 2013. In the words of founder Kelly Weinberger:

“These tariffs are paralyzing us as a small fair trade business with limited resources and an already tight clash flow. Suddenly a huge amount of money needs to be reallocated to pay tariffs instead of being able to order more product from our low-income artisan groups.”

So while GSP benefits help economic development both at home and abroad (such as WorldFinds artisans pictured above), GSP expiration can quickly reverse those gains. That is just one more reason that Congress must pass legislation to renew GSP early next year to prevent another expiration when its authorization expires on December 31, 2017.

This post is part of the 5th Annual “Imports Work for America Week.“ For more information visit the Imports Work website.

• 2013 INC 5000 member
• 2013 state “manufacturer of the year” nominee
• 2014 INC 5000 member (albeit a much lower rank)
• 2014 county chamber “small business of the year” winner
• 2015 state “manufacturer of the year” nominee

Everything sounds great, right? Well despite these successes, this small manufacturer could have grown so much more if not burdened by $15,000 to $20,000 per month in higher taxes because of GSP expiration. In fact:

• 2014 ended 4 straight years of double-digit employment growth rates
• plans to break ground on a (further) expansion in 2015 were put on hold indefinitely
• stagnant revenue will keep the company off of the 2015 INC 5000 list

We often publish data about the tax costs of GSP expiration, but that’s only a small part of the story. GSP expiration prevents good – and even great – companies from reaching their full potential.

Our survey last year showed this as well, where 44 percent of respondents reported hiring freezes because of GSP expiration. The impacts were particularly hard on small businesses with less than 25 employees. This includes McGuire Manufacturing in Cheshire, Connecticut, a small manufacturer with 20 employees. As McGuire President Mike McRoberts said at the time:

“As a result of GSP expiration, we have allowed attrition to reduce our workforce by two fulltime positions. I’d like to replace them, and would do so immediately if Congress renews GSP retroactively, but I can’t right now.”

That same survey showed 40 percent of companies reporting capital expenditure delays, which have a ripple effect on other local businesses. Small businesses like B&C Technologies, which has 28 employees in Panama City, Florida, are among the hit hardest once again.

B&C imports industrial and commercial laundry equipment from Thailand under GSP. In March 2014, it bought a building in Panama City Beach with a plan to begin manufacturing in the United States by April 2015.

According to B&C President Bengt Bruce, that goal now has slipped to July 2015 – at the earliest – and plans have been scaled back “quite a bit.”

Instead of a complete overhaul of the building (e.g., new floors, walls, re-designed space) that would have generated significant work for local contractors, B&C is doing only what is necessary to move into the new office space.

None of these impacts show up in the trade data, but they are the practical result of Congress’ continued failure to renew GSP.

Nearly 340 organizations in 41 states (plus DC) have now joined the supporter list. You can see them all here. If you’re not on the list but want Congress to renew GSP, be sure to add your name here so we can keep highlighting the importance of GSP to the different states and congressional districts.

Kona isn’t the only new company calling on Congress to renew GSP before it expires on July 31. Other new additions include:

• Deringer-Ney, based in Vernon Hills, Illinois (10th District) with additional locations in Bloomfield, Connecticut (1st District), Blaine, Minnesota (6th District), and Marshall, North Carolina (11th District), which imports from India;
• Mullican Flooring, based in Johnson City, Tennessee (1st District) with additional locations in Norton, Virginia (9th District), Ronceverte, West Virginia (3rd District), and Holland, New York (27th District), which imports engineered wood flooring from Indonesia, and
• Von Roll USA, located  in Schenectady, New York (20th District) with additional locations in New Haven, Connecticut (3rd District), Douglasville, Georgia (13th District), Monmouth Junction, New Jersey (12th District), and Cleveland, Ohio (9th District), which imports mica flooring from Brazil.

If you lost track, those companies operate in 12 states and 14 congressional districts – and they represent just four out of the 160+ American companies and associations on the Supporter List.

Not on the list but import under GSP? Make sure to add your name for FREE here so that Congress knows that you need it to renew GSP before it expires on July 31.

Connecticut companies imported an estimated $492 million under GSP in 2011, saving them on average 2.4%. South Africa was the most important source of GSP imports, accounting for about 25 percent of the tariff savings. Unwrought zinc was Connecticut’s top import under GSP in 2011 and would have faced average tariffs of 1.5% without GSP.

Yet GSP is set to expire on July 31, 2013, and companies could face tariffs higher tariffs starting on August 1 if Congress does not pass legislation renewing GSP. When GSP expired at the end of 2010, American companies paid nearly $2 million per day, every day, until Congress finally acted 11 months later!

This graphic shows just some of the negative impacts from the last GSP expiration. It also helps explain why more than 335 companies and associations – including at least 11 in Connecticut – joined the 2011 GSP Supporter List urging renewal of the program when it last expired.

Are you a Connecticut company that would be hurt by GSP expiration? If so, please take 30 seconds to let Congress know by adding your name to our free 2013 GSP Supporter List right now.