GSP benefits have become even more important in recent years since Altus Brands completely stopped buying this product from China due to 25% Section 301 tariffs. In 2020, GSP saved Altus Brands over $25,000 in eliminated tariffs. The company’s imports also further GSP’s development goals: it purchases from a factory that offers benefits and higher pay than other local factories. It’s good for workers in the Philippines and the United States, since the high-quality products command a higher price and help support other Made in the USA product lines.

But GSP expiration threatens all of this. Altus raised prices to cover the $14,000 (and growing) in extra tariffs paid. It has lost sales at home and in export markets (e.g., Canada, Germany, and Russia), which in turn led to reduced purchases from the Philippines.

According to company president Gerand Lemanski, it could get worse yet: “Without renewal of GSP my product is not competitive in the US market and I will have to cease selling this product within a year. That will result in letting one production person go.”

Unfortunately, Congress recently recessed until mid-September. Altus Brands’ experience shows why it must make GSP renewal an immediate priority when it returns.

Note: this example came from a new Coalition survey on expiration impacts. It was published with permission. GSP importers are encouraged to take the survey here – no company-specific details will be published without such permission.

Worker impacts from a small business that has paid $100,000 in tariffs: “GSP impact has been severe this year. Had to lay off 1 person and did not hire for a new sales position.”

Covid/worker impacts from a small business that has paid $350,000 in tariffs: “Covid19 shutdown reduced our cashflow, with GSP [expired] we don’t have the extra funds to order inventory we need. We were looking to hire at least 3 new employees. Now on hold due to GSP.”

China/worker impacts from a small business that has paid $40,000 in tariffs: “We rely heavily on Thailand produced goods in our market to compete with China imports from our competition. We are higher priced even without 10% tariffs. Now we have a real threat to our market share with cost increase on goods of 10%…Possible funds normally used for employee raised wages will be paid in new tariffs. This weakens our work force stability, thus threatening our output capacity.”

U.S. manufacturing impact from a business that has paid $15,000 in tariffs (but estimates $350,000 in tariffs if GSP remains expired all year): “We are selling our aluminum products to a leading US HVAC manufacture and those products are excluded from 232 tariff but we still have to pay the standard duty without GSP.”

In summary, GSP expiration reduces American jobs, makes pay/benefits at existing jobs worse, makes China more competitive, and raises costs for American manufacturers (even for products not available in the United States). Expiration impacts snowball over time, so Congress should renew GSP – and refund tariffs paid – as soon as possible.

If you’re a company impacted by GSP expiration, please answer our very short survey on GSP expiration impacts to date (the source for all of the above examples). To further 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

Those dollars and cents impact peoples lives and livelihoods: Sugarpod laid off a staff member and cut worker benefits due to higher costs. It scaled back other investments as well, including canceling plans to expand its product lines.

In addition to the $30,172.01 that is unavailable to Inplac for investing in operations, the company also lost sales due to GSP expiration. Factoring in 4.2% import taxes make it difficult to compete in the low-margin market for plastic bags.

As noted previously, there are no refunds for sales not made, meaning companies can never truly “recoup” all the losses from GSP expiration. The longer Congress allows GSP to remain expired, the greater the potential damage for companies and workers alike.

Both Sugarpod and Inplac provided this info by answering our GSP expiration survey, which you can complete here. As always, no company-specific information will be published without explicit permission.

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.

Today we heard from Fast-Pak Trading, one of the nearly 400 GSP supporter list organizations advocating for swift, retroactive GSP renewal. (Use these links to see the full list or add your organization.)

Based in Secaucus, New Jersey, Fast-Pak has 11 employees and imports food products from Macedonia under GSP. Its products are sold in over 1,000 US grocery stores, including Whole Foods and Fairway Markets. However, Fast-Pak has paid $50,000 in extra tariffs in the 5 weeks since GSP expired. According to Fast-Pak’s president:

We deal with food products from Macedonia. These items were hit hard with the expiration of GSP. Customers are not accepting price increases, sales are going down and inventory is not what it should be for this this time of year. Plans to expand the company into other US territories are now on hold until this situation is reversed.

Fast-Pak knows all too well the potential damage of GSP expiration to business operations. Before GSP expired in 2013, the company was growing and planned to hire both new sales people and warehouse staff. Instead, Fast-Pak had to lay off 3 workers and cut salaries by 20% across the board.

GSP renewal, even one that refunds tariffs paid, cannot undo all of the damage caused during the expiration. People that skip buying roasted red peppers today because prices went up are unlikely to buy twice as much in the future because prices returned to normal. Those sales – and the jobs they could support – are gone forever.

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.

• Thompson Traders in Greensboro, North Carolina: GSP expiration cost Thompson Traders $220,000 and forced it to lay off 8 people, dropping employment to 12 workers. With GSP renewed, Thompson Traders initiated a new product line and has doubled to 25 workers.
• Universal Arquati in Santa Clarita, California: After paying over $180,000 in extra import taxes during GSP expiration, renewal allowed Universal Arquati hire 12 new workers and buy equipment that will help increase sales even more.
• Sophia Foods in Brooklyn, New York: GSP expiration cost Sophia Foods $46,000 in extra taxes and forced the small business to lay off 2 workers. With GSP back in place, Sophia Foods hired 2 workers to fill the positions eliminated during expiration – and then added 2 more new positions.

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, Fab-Line was forced to raise prices to compensate for those new import taxes. Ultimately the company paid about $350,000 in new tariffs. This hurt the company, which had to lay off one employee, and the American manufacturers that now had to pay more for Fab-Line’s equipment.

The retroactive renewal allowed Fab-Line to hire 2 new workers – a service manager and a service engineer. Yet Fab-Line President Patrick Canning says another potential expiration threatens the company again:

“If the GSP does not get signed I will raise my pricing to pay for the duties and of course that will have a negative impact on my business.”

GSP may not expire until December 31, but the decision date is much sooner for Fab-Line. According to our newest survey, Fab-Line will start placing orders for 2018 delivery in mid-August. If Congress has not renewed GSP before the August recess, Fab-Line will be forced to guess whether orders will be subject to extra taxes.

After 7 years of trials and tribulations, the start-up company reached break-even in 2013 and had grown to 20 employees. Then Congress allowed GSP to expire. As Thompson Traders’ President Fred Starr reported in January 2015:

“Due to our financial position and our inability to pass this charge onto our customers, we had to slow down growth, including hiring. We would be a different company today without this totally unanticipated tariff. We’ve reduced our payroll by eight people, a 40% reduction and will not be adding people, until we have a better government environment, including the renewing of GSP.”

Ultimately, Thompson Traders paid $220,000 in higher taxes during the two-year GSP expiration.

With GSP reinstated and tariffs refunded, the company reinvested all of the refunds back into the business. The company initiated a major new product line in a new market in 2015. Thompson Traders rolled out stocking programs with three of its biggest customers and initiated a program to try to manufacture in the United States.

Today, Thompson Traders has 25 employees – more than before GSP expired in 2013 (and double the 12-employee low hit during GSP expiration). Growing sales meant that GSP saved the company nearly as much ($180,000) in the first year of renewal and it did in the two years of expiration ($220,000).

Our Thompson Traders 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).

Thompson Traders is just one of the GSP importers sharing how GSP allows its businesses and workers to thrive on our Company Profiles page.

(If you have not done so already, please answer the GSP renewal impacts survey here.)

Yet other companies, such as Novita in Monrovia, California, are still working to overcome the deep losses caused by GSP expiration. Novita imports jewelry from Indonesia that it sells to manufacturers, wholesalers, and retailers in the United States, Canada, Mexico, and South Africa.

While GSP was expired, Novita was forced to lay off 3 of its 17 workers. For the remaining 14, overtime was cut and salaries were reduced (or promised raises not given). Officers used personal loans and credit lines to loan the company funds so that it could continue paying bills. According to Vice President George Nazarian, Novita contemplated shutting down completely on account of GSP expiration.

Saying that GSP is crucial for Novita is a major understatement, but even a year after the retroactive renewal the company is not “whole” again:

• the $2 million in tariffs paid during expiration were refunded, but the $250,000 in interest payments to banks to keep the lights on are gone forever;
• the 14 remaining employees have received raised, but the 3 positions lost have not been refilled, and
• sales of GSP-eligible goods have increased over the past year, but they cannot “undo” the lost sales over a 2-year period.

And that is the reality of GSP expiration: at best it is a speed bump that slows the growth of small businesses like Summit and Sophia Foods. The other end of the spectrum is much worse. Novita was able to avoid the worst of potential outcomes, but the lingering negative effects of GSP expiration show why it is so important for Congress to renew GSP well before its scheduled expiration at the end of 2017.

Novita 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 responses here, here, and here and some preliminary survey response data here and here.