While GSP was expired, Royal Chain paid more than $2 million in new tariffs. It lost millions of dollars more in sales because products were no longer competitive once tariffs were added to the cost. Royal Chain could not fill new positions, delayed equipment upgrades, and put expansion plans on hold.

GSP expiration in 2013 made its products less competitive and cost 3V millions of dollars in lost sales. At the same time, customers that continued purchasing at higher prices were made less competitive by the extra $500,000 in taxes assessed by Customs.

The retroactive GSP renewal by Congress allowed 3V Sigma to build an addition to its warehouse and lowered taxes on the business by hundreds of thousands of dollars. Continued GSP benefits are pivotal for 3V Sigma and the American manufacturers it supplies.

When GSP expired, Leila’s Linens had to raise prices to cover the new tariffs costs. In addition to $175,000 in tariffs paid, Leila’s Linens lost an estimated $1.7 million in sales when major clients started sourcing directly from non-GSP countries. Lower volumes made it hard to service smaller clients, too. Leila’s Linens delayed all major expenditures, including new workers.

When GSP expire in 2013, Primetac was forced to raise prices to compensate for those new import taxes. This was no small increase, as the company paid about $1.5 million in new tariffs. The resulting sales drop forced Primetac to freeze hiring, slash benefits, and delay certain investment plans.

The retroactive renewal allowed Primetac to hire 2 new hires and institute a profit-sharing plan for employees. Benefits were not limited to Primetac’s staff: it also purchased a forklift from Crown Industries in Ohio and hired a local contractor to move ahead with a lighting upgrade in its warehouse.

Primetac’s Peter Feniello emailed the other day with another update. After reiterating all the past good allowed by renewal, he added:

The other side of the argument is what we are NOT doing presently due to GSP uncertainty. We are in need of 2 hires (one in administration here in NJ, another as a territory salesperson). We are not going to move on these until the dust settles and GSP renewal is in sight.

Once again, despite expiration itself being 6 months away, companies are starting to pull back on investments and hiring.

Our Primetac 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).

The responses to date clearly illustrate why Congress must act sooner rather than later to renew GSP and provide businesses the certainty required to plan for 2018 and beyond. For example:

• 15 percent of respondents report that any new orders placed now will be delivered in 2018 and could face tariffs if Congress does not renew GSP;
• 56 percent of respondents will be “past the point of no return” for 2017 deliveries by the time Congress returns from the August recess, and
• 100 percent of respondents must place orders for 2017 before November 15, meaning that cannot know whether orders will face new taxes if Congress waits until December to act.

The charts at the bottom show the breakdown of responses to date. Like Oxan Inc and Kervan USA, the potential expiration at the end of the year if forcing companies to make tough decisions now.

Bill Dull from Triad Magnetics in Perris, California reported that GSP provides a competitive edge against ‘made in China’ products, since most of its competitors manufacture finished goods there. However, the company is bidding on business for 2018 under the assumption that GSP will not be renewed. In several cases, it has received feedback that it will not be awarded the business due to the higher prices.

Kelly Weinberger from WorldFinds in Westmont, Illinois reported plans to bring in its Spring 2018 product early because of the possibility of GSP expiration. However, this will have a major effect on cash flow since it will not ship – and therefore get paid for – the product until much later.

One company that requested anonymity reported that it will place an order in September for delivery in 2018 that will face over $1 million in extra taxes if Congress fails to renew GSP. Whether Congress renews GSP between order placement and delivery will have a huge impact on the companies 2018 plans. If Congress renews GSP, it will open a new location in Los Angeles that will employ 10 workers. If Congress does not renew GSP, it will not open the Los Angeles location and may need to shut down a New Jersey location that employs 8 workers.

With each passing day, more GSP users are put into a position of having to guess about important pricing issues. Congress can eliminate that uncertainly by passing immediate legislation extending the GSP program beyond December 31.

We plan to update the chart below as more companies respond, so please take a moment to answer the VERY BRIEF survey here. (Please note: company-specific information will not be used without explicit permission, as was provided by each of the companies mentioned above.)

New tariffs from GSP expiration in 2013 put the company’s products at a disadvantage to Chinese mouldings, which typically account for 70+ percent of US imports. In total, Universal Arquati paid about $185,000 in extra taxes because of GSP expiration. The uncertainty regarding when, or even if, those taxes might be refunded led Universal Arquati to freeze all hiring and investments.

GSP expiration in 2013 led to an estimated $1.5 million in sales for Kona, which also paid nearly $600,000 in tariffs. As Kona’s Chairman Jacob Heilbron said in 2014:

“We’re unable to raise prices during our model year so the loss of profit is absorbed into our bottom line. We would like to hire new U.S. based personnel for our R&D/Product Development team but are waiting until GSP is renewed.”

While it took nearly a year to receive all of its tariff refunds, Kona took immediate steps to invest and hire new workers following GSP renewal in 2015. In the 30 days after GSP was renewed (but before benefits kicked back in), Kona hired a senior engineer and an industrial designer and had plans to hire a new product manager the next month. It has hired two more workers since and now has 32 employees, a nearly 20 percent increase over early 2015 before Congress renewed GSP.

Our Kona 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).

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