From January-August 2021, American companies paid at least $666 million in extra taxes as a result of GSP expiration. Imports into 36 states (plus Puerto Rico) paid at least $1 million in tariffs from January-July 2021 due to GSP expiration. The map below shows estimated tariffs paid for products claiming GSP by state.

August was the most expensive month of GSP expiration yet both nationally and for 15 states: Alabama, Delaware, Georgia, Hawaii, Idaho, Maryland, Minnesota, Montana, New York, North Carolina, Oklahoma, Pennsylvania, South Carolina, Texas, and Washington. Tariffs paid on imports into Minnesota were 84% higher than any previous month. For Pennsylvania and Georgia, tariffs paid were 53% and 27% higher than any previous month, respectively.

GSP expiration costs have a direct, negative impact on American workers:

• “GSP can be the difference between making a profit or a loss and without profits we obviously can’t increase wages and benefits” says Charlie Smith of BROSCO, a 4th generation, family-owned millwork distributor in Massachusetts and Maine. “Continued losses put all of our 360 workers’ jobs and livelihoods at risk.”
  
• “We are having challenges staying competitive“ says Ajay Kochhar of A&S Distributors in Salida, California. The 7-worker company has paid over $60,000 in extra taxes on food products from Fiji because of GSP expiration. “We can’t hire and give employees full benefits as this is a major increase.”
  
• “The tariffs when added to the rapidly escalating costs of containers have been devastating” says Sandra Colyer of Lily Koo LLC in Jamestown, North Carolina. “Employees laid off due to Covid are slowly being brought back, but return to work would occur more quickly if money was not being spent on tariffs.”

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.

In the first five months of expiration, American companies paid at least $397 million in extra taxes as a result of GSP expiration. Companies in 32 states paid at least $1 million in tariffs from January-May 2021 due to GSP expiration. The map below shows estimated tariffs for products claiming GSP paid by state in that period.

May was the most expensive month of GSP expiration yet both nationally and for 19 states: Alabama, Colorado, Delaware, Georgia, Hawaii, Illinois, Kansas, Massachusetts, Minnesota, Mississippi, Missouri, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Pennsylvania, South Carolina, and Virginia. In three states – Colorado, Kansas, and New Mexico – tariffs paid in May were at least double any of the previous four months.

While many believe the United States has low tariffs, Colorado companies have paid extra tariffs averaging 11.7% due to GSP expiration. Companies in Maine, Montana, New Hampshire, Utah, and Wisconsin have all paid extra tariffs average 7-10%.

The data on tariffs paid is a conservative estimate, and the real figure likely is higher. Why? Estimates only capture products that continued to claim GSP despite expiration. Yet imports of many products that traditionally get GSP have not claimed it in 2021. Tariffs paid on those imports still would be eligible for refunds in the event of a retroactive renewal, but importers would need to file manual requests.

It is critical that Congress renew GSP – with refunds for tariffs paid – as soon as possible. Companies that want to help the Coalition for GSP educate policymakers on who is hurt by expiration (and how) should:

• 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

In the first two months of expiration, American companies paid at least $135 million in extra taxes as a result of GSP expiration. The map below shows estimated tariffs for products claiming GSP paid by state.

The products facing the most new tariffs vary greatly by state:

• In New York, gold jewelry faced $2.4 million in new tariffs.
• In Florida, roses faced another $2.2 million in new tariffs due to GSP expiration (on top of $1.8 million in January) in the run-up to Valentine’s Day.
• In Texas, nearly $800,000 in tariffs were paid on plywood.
• In Pennsylvania, nearly $400,000 in tariffs were paid on colored pencils.
• In Ohio, $200,000 in tariffs were paid on wire harnesses used in auto manufacturing.

The data on 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 imports of many products that traditionally get GSP did not claim it in February. Tariffs paid on those imports still would be eligible for refunds in the event of a retroactive renewal, but importers would need to file manual requests.

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

Burris Company, a manufacturer in Greeley, Colorado, has paid nearly $400,000 in tariffs due to GSP expiration. Vice President of Finance Mike Kinnison reports: “Burris Company manufactures as well as imports. The lower cost of imports helps to sustain our manufacturing and keep overall costs low. Additional tariffs puts US manufacturing at risk. Much more delay will result in canceling any large capital investments and lead to layoffs.”

Franklin Mfg Inc. in Jericho, New York has paid about $25,000 in tariffs due to GSP expiration. It raised prices to reflect tariffs, which led to lost sales and lower planned purchases going forward. As Franklin Mfg President and Owner Jesse Taube reports: “We are in a vulnerable position to lose our current customers due to not being as competitive.”

Fusion Gourmet, a food importer in Rancho Dominguez, California that has paid $25,000 in tariffs, similarly raised prices and lost sales. According to Fusion Gourmet President Steve Liaw, job impacts are felt by workers in both the United States and Indonesia, it’s primary GSP source country.

• In the United States: “Due to increased costs related to GSP, we are not able to increase our hiring for 2021. These additional costs directly impact our budget that we allocate towards seasonal hiring.”
• In Indonesia: “We will also reduce our orders from factories that are in countries impacted by GSP. This lost revenue will negatively impact these factories which are usually 70+% women workers.”

A Simpler Time, which is based in Morrisville, North Carolina and also operates a retail store in New Orleans, Louisiana, reports how GSP expiration directly hurt wages for its American workers. According to A Simpler Time President Jeff King: “Normally [we] pay quarterly bonuses to employees, but have delayed them as we can’t pass all the increased costs on to customers.” It also didn’t replace a worker that left and reduced another’s hours due to a combination of higher import costs, supply chain issues, and retail sales that remain well below pre-Covid levels.

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

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

California accounts for more than a quarter of GSP savings, more than the next 3 states – New York, Florida, Texas – combined. Georgia, New Jersey, Ohio, Illinois, Washington, and Pennsylvania round out the top 10 states for GSP savings in 2020.

Estimated GSP savings for Colorado grew from $4 million in 2019 to $14 million in 2020, by far the largest increase. Estimated GSP savings also grew in Wisconsin (+$869,000), Arkansas (+$478,000), Washington (+$300,000), Delaware (+$73,000), and Wyoming (+$34,000). Estimated savings fell in all other states.

While Covid-19 had big impacts on GSP imports in the spring, declines were largely due to country suspensions. Excluding products impacted by country suspensions (e.g., India, Turkey, Thailand), most states’ GSP savings grew. For example, New York’s GSP savings grew by $15 million on non-impacted products but fell by $2.5 million overall due to country suspensions. Similarly, Texas’ savings GSP by $9 million on non-impacted products but fell by over $7 million overall.

Since GSP expired on December 31, American likely have paid about $110 million in tariffs that previously would’ve been “GSP savings.” 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:

• 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

However, GSP expired on January 1 and companies must now pay over $2.5 million per day in extra taxes. GSP expiration is causing immediate harm to American companies and workers. For example, a small business in New York recently reported:

Because GSP expired, we will have to let 3 employees go that were previously going to be brought from temporary to permanent with benefits. Two good paying electronics technician jobs we planned to add are now on hold as well. We are a smaller company and can’t afford $163,000 in expenses and still be able to expand. Prices will likely have to increase with risk of losing further business in a very tight market, with major competition from China.

Another company with about 200 employees across six states is paying over $80,000 per month in new tariffs, a figure that will rise to $130,000+ per month in March. It reported:

We can’t reduce orders until we design and create new products to replace the items we currently buy. We will have to pay the duties in the interim and have raised prices only where the market allows. Therefore, we will sustain a low margin and cut costs including pay to employees.

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:

• 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

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.

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.

GSP’s current authorization expires on December 31, 2020, and Congress must pass legislation renewing GSP this year for benefits to continue into 2021 and beyond. Companies that want GSP renewed should add their name to the free GSP supporter list.

By GSP savings, California was far and away the largest GSP beneficiary. California’s estimated $270 million in tariffs waved was nearly as much as the next four largest states – Florida, New York, Texas, New Jersey – combined.

While overall savings levels were lower, imports into Montana and Maine would face the highest average tariffs without GSP (10.9% and 10.6%, respectively). The high average tariff waived results from the dominance of travel goods imports, which can face tariffs up to 20.0% without GSP. GSP waives tariffs averaging about 7.0% on imports into Utah, Wisconsin, Arizona, and Colorado, well above the 5.0% national average.

U.S. companies saved about $180 million in tariffs on imports from Thailand – more than any other country – though GSP eligibility for about 1/3 of imports its products were removed in April 2020. Cambodia was the second most important country for U.S. savings at $169 million, following by Indonesia at $150 million. Despite being GSP-eligible for only 5 months, India was the fourth-most important country in terms of savings at $121 million. Like the states, countries such as Burma and Cambodia where travel goods are most important GSP products had the highest average tariffs waived.