In a major shift from 2018, consumer goods were the largest category of GSP imports by both value ($6.6 billion) and savings ($512 million). Consumers goods accounted for 32% of total GSP imports, up from 24% the prior year. Because average tariffs (without GSP) are much higher (7.7%), consumer goods accounted for about half of all GSP savings. Expanding GSP to cover travel goods in 2016/2017 has led to steadily increasing consumer goods imports over the last several year.

Industrial materials ranked second among GSP products both by import value ($6.0 billion) and estimated tariff savings ($256 million). Industrial materials were the largest GSP imports, usually by a wide margin, in each of the last 10 years. The reason industrial materials slipped to #2 is clear from the “top countries”: 5 months of GSP for India eliminated more tariffs on materials used by American manufacturers than full-year GSP for any other country.

Agricultural and food products ranked third among GSP products by import value ($2.9 billion) and estimated tariff savings ($116 million). Among the more surprising data points: Ecuador was the second-largest source of food and agricultural products in 2019 by the value of GSP savings, primarily on tropical plants such as taro, mangoes, and guavas.

Capital goods ranked fourth among GSP imports by value ($2.8 billion) and savings ($83 million) in 2019. Despite similar import values, GSP savings on capital goods were much lower than GSP savings on agricultural and food products due to lower average tariff rates (3.0% versus 4.0%, respectively). India was the second-biggest source country in terms of tariff saving on capital goods, again demonstrating how American manufacturers are bearing the brunt of the decision to end GSP for India.

Autos and parts ranked fifth among GSP imports by value ($2.3 billion) and savings ($66 million) in 2019. Passenger vehicles are not eligible for GSP, so imports tend to be concentrated among parts such as engines, tires, and wire harnesses. Not surprisingly, states with a heavy automotive presence such as Michigan and Tennessee are among the top importers by GSP savings on these components and parts.

Sophia Foods was forced to lay off workers each of the last two times Congress allowed GSP to expire. In 2011, it laid off two workers when profits plummeted due to higher tariff costs. As detailed in the 2014 GSP expiration impact survey report (featuring owners Candace and Danny Abitbul on the cover), GSP expiration in 2013 forced Sophia Foods to lay off two employees (out of 7) and implement a hiring freeze. The company also put plans to purchase a warehouse and expand its space on hold until it was sure about the future of the business, which was so closely tied to GSP renewal.

As Candace has noted, the uncertainly associated with GSP renewal/expiration can create paralysis for small businesses:

Stability is the key here. The living in limbo was the worst part of the GSP non-renewal period. We couldn’t move forward, but hesitated to move backward too much without knowing what might happen. It felt like a huge part of our cash flow was being held hostage, and making sound business decisions became increasingly impossible as time wore on.

With GSP back in place, Sophia Foods was able to hire 2 workers to fill the positions eliminated during expiration – and then add 2 more new positions. It increased benefits for all employees and doubled its square footage by expanding into neighboring warehouse space.

Our Sophia Foods profile page has more details about the importance of continued GSP benefits to the company (also available as a one-page PDF here or below).

When GSP expired in 2013, Golden Country raised prices to reflect the new tariffs and saw sales drop as a result. It froze hiring – and couldn’t replace employees that left – and help off on updates to its Chicago facilities. Ultimately, the small business paid over $1 million in unnecessary tariffs while waiting for Congress to renew GSP.

GSP renewal allowed Golden Country to invest in both its people and facilities: Golden Country was able to give its employees raises and purchase new warehouse equipment and trucks. GSP eliminated about $400,000 in tariffs on Golden Country’s imports in the first year after renewal – savings that could be passed along to consumers.

As detailed in the 2014 GSP expiration impact survey report (right, featuring Candace and Danny on the cover), GSP expiration in 2013 forced Sophia Foods to lay off two employees (out of 7) and implement a hiring freeze. The company also put plans to purchase a warehouse and expand its space on hold until it was sure about the future of the business, which was so closely tied to GSP renewal.

So where do things stand now for Sophia Foods? Fortunately, it received refunds for tariffs paid during the expiration quickly (within 1-3 months). According to Candace:

Since GSP renewal, we refilled the two spots that were eliminated during expiration and added another position, and we are now able to offer more paid time off to our loyal, hardworking team. We have doubled our leased space, and are now confidently and actively searching for a warehouse of our own to purchase.

Thanks to the stability ensured by GSP renewal, our sales have increased, and we have very recently landed two major accounts which we hope will expand our business exponentially into the future.

So things are definitely looking up! But continued growth depends upon Congress renewing GSP before it is set to expire again at the end of next year. After all, Sophia Foods had to lay off two workers when GSP expired in 2011, then spent the next two years rebuilding the business before history repeated itself.

For small businesses, the uncertainly associated with GSP renewal/expiration can create paralysis. As Candace noted in this latest survey:

Stability is the key here. The living in limbo was the worst part of the GSP non-renewal period. We couldn’t move forward, but hesitated to move backward too much without knowing what might happen. It felt like a huge part of our cash flow was being held hostage, and making sound business decisions became increasingly impossible as time wore on.

This is a message that must be delivered to Members of Congress over and over and over again, right up until it renews GSP beyond December 31, 2017. But the Coalition can only provide them if importers share them with us first, as Candace has done here and you can do by answering the survey too.

Sophia Foods provided the above information in response to our GSP renewal impacts survey. If you have not done so already, please take a minute to answer these questions today. As always, all data will be kept confidential and no company-specific answers will be attributed unless permission is explicitly granted. You can find another company response here and some preliminary survey response data here and here.

The Sophia Foods timeline from an August 2014 post

In May 2011, Sophia Foods first contacted the Coalition for GSP to say that it had reached out to its representatives about the impacts GSP expiration was having on the business.

By June 2011, Sophia Foods had been forced to lay off 2 workers to stay afloat in light of plummeting profits associated with its GSP imports.

In October 2011, Congress passed legislation renewing GSP through July 31, 2013.

In July 2013, Sophia Foods contacted the New York Senators’ offices multiple times urging GSP renewal. It warned of the possible impacts of GSP expiration by citing its experience from 2011. It emphasized that recovering after 2011 was difficult and asked not to be put through the stress and uncertainty again.

By early September 2013, Sophia Foods had paid $3,700 in import taxes and expected another $7,000 before the end of the month because of GSP expiration. Candace wrote: “It’s hard to compete when you don’t know the actual final cost of the goods. We’re essentially playing ‘chicken’ either with our competitors or our year end profit – destabilizing situation for the whole market! We’ve suffered enough! Cut us a break already!“

By early March 2014, Sophia Foods had laid off an employee. In response to a survey, Candace wrote: “We laid off one driver due to slowing sales directly related to the raising of prices on product brought at the higher rate. To compound the problem, we’re now sitting on slower moving inventory which is strangling our cash flow.“

In July 2014, Sophia Foods joined in our Tariff Tuesdays campaign (owners Danny and Candace are the people in the cover photo) and repeatedly told staff for their congressional representatives about the impacts of GSP expiration on their business and the importance of renewing it.

By August 2014, Sophia Foods had laid off another employee and delayed a major investment, as noted above. History had officially repeated itself, as the company had to lay off two employees because of GSP expiration in the span of just three years.

By county, the highest savings came on imports from India ($184.0 million), Thailand ($146.0 million), Indonesia ($94.3 million), Brazil ($86.4 million), and the Philippines ($48.6 million).

By product, the highest savings came on imports of radial car tires ($22.7 million), silver jewelry ($18.2 million), miscellaneous food products ($14.2 million), aluminum alloy plates and sheets (12.0 million), and ferrosilicon manganese, which is used to manufacture steel ($10.9 million).

While US tariffs are generally low, effective tariffs waived by GSP can be quite high.  For example, GSP saved American companies from paying tariffs of 17.9% on certain nuts and seeds, 15.0% on Romano and other cheeses, 12.5% on ballpoint pens, and 10.0% on ferrosilicon chromium.

If you have any questions about the data, give us a call at 202-347-1085, and if you’re a company importing these or other GSP products, make sure to add your name to our Supporter List.