Fun, old-fashioned family Christmas lights have faced up to $65 million in extra tariffs due to GSP expiration. Those high costs are the result of a few factors: 1) regular tariffs on Christmas lights are high (8%); 2) U.S. imports of Christmas lights from the world are at an all-time high; and 3) GSP countries have become the dominant suppliers as companies seek alternatives to Chinese suppliers, which face 33% tariffs (8% regular tariff + 25% Section 301 tariff).

If U.S. policymakers want to see shifts out of China, letting GSP expire is a no good, rotten way to show it. As recently as 2017, China accounted for $399 million out of $472 million (84%) of all U.S. Christmas lights. Since GSP expired on December 30, 2020, American companies have imported over $830 million in Christmas lights from GSP countries. That works out to almost $7 in imports from GSP countries for every $1 from China. But because GSP expired, each shipment of twinkling holiday cheer gets hit with an 8% tax. Bah humbug, indeed.

GSP renewal shouldn’t be hard: Congress isn’t developing a non-chloric, silicon-based kitchen lubricant here. In fact, GSP’s support is so broad and bipartisan that no sitting Member of the House of Representatives voted against GSP renewal when it last came up in 2018. And yet GSP expiration is about to enter year 3 and American companies already have paid well over $2 billion in extra tariffs.

If Members of Congress are looking for any last-minute gift ideas for American companies, renewing GSP is a good one. Short of full renewal, passing the bipartisan H.R. 8906 would refund over $2 billion to companies that have been waiting on Congress to do something – anything – that provides GSP tariff.

You can buy a whole lot of above-ground pools or Jelly-of-the-Month club memberships with that kind of holiday bonus.

Fun, old-fashioned family Christmas lights faced $30+ million in extra tariffs due to GSP expiration. Regular tariffs on Christmas lights are high (8%), and there’s been a huge shift in sourcing from China to GSP countries in the last few years to escape 25% Section 301 tariffs.

In the last 12 months, Christmas lights imports from GSP countries ($395 million) were 6 times higher than from China ($64 million). As shown in the graph, the current sourcing is nearly the opposite of 2017, when China accounted for $399 million out of $472 million (84%) of all U.S. Christmas light imports, compared to just 14% for GSP countries. Yet imports from China dropped precipitously after Section 301 tariffs increased to 25% in May 2019 and GSP countries were to fill the void (aka save the holidays).

Unfortunately, there are no good sourcing options for companies that want to provide affordable strings of Christmas lights (whether 2 or 250 strings). Even though imports from China face 33% tariffs (8% regular + 25% Section 301), American companies have paid considerably more tariffs on imports from GSP countries that should be duty-free than on imports from China and all other countries combined.

It’s not a controversial program: GSP’s support is so broad and bipartisan that no sitting Member of the House of Representatives voted against GSP renewal when it last came up in 2018. And yet GSP expiration is about to enter year 2 and American companies already have paid $1+ billion in extra tariffs.

If any of you [Members of Congress] are looking for any last-minute gift ideas for me, I have one: renew GSP.

From January-September 2021, American companies paid at least $763 million in extra taxes as a result of GSP expiration. 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.

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.

Due to GSP expiration, Ciranda has paid over $209,000 in extra tariffs on imports of tapioca powders and syrups, coconut products, rice syrup and powders from Brazil, Pakistan, Philippines, and Thailand. The need to pass these costs onto customers led sales to fall. Even if tariffs paid (eventually) are refunded, those lost sales can’t be regained. As an employee-owned company, everyone at Ciranda is impacted by those lost sales and profits.

Ciranda is a great example of the kind of trade GSP is meant to promote. Its qualification process includes an in-person visit to every supplier. While on-site, it observes each ingredient’s journey from the field to the processing plant. In addition to evaluating product quality, it surveys working conditions, fair labor practices, and the overall environmental health of the project. In 2020, Ciranda published a book highlighting the farmers around the world growing their product.

By eliminating U.S. tariffs on sustainable food ingredients, GSP helps companies like Ciranda do “more good” for workers and the environment in developing countries and the United States. Their example also highlights the risk of imposing too many eligible criteria on GSP countries for which higher tariffs are the only possible punishment. No matter how well-intentioned a new GSP criterion (e.g., on environment) may be, terminating GSP often hurts those meeting or exceeding even the highest standards. That’s why the Coalition believes Congress should consider changes to mitigate any punitive actions as part of GSP renewal, such as supporting partial (instead of full) terminations and/or creating a mechanism for good actors to retain benefits.

Note: Ciranda’s story came from a new Coalition survey on expiration impacts. GSP importers can take the survey here.

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

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

Kouboo sells home decor products that are handmade from natural materials, such as rattan vines. Kouboo was started by Patrice and Joey Gerber with products sourced from the Philippines, and sourcing expanded to Indonesia and Myanmar. The handmade nature of the products provides significant employment opportunities in GSP countries, especially for women weavers in poor, rural areas.

As Kouboo has grown, GSP savings rose dramatically: from a few hundred dollars per month in 2013 to a few thousand dollars per week in 2020. So has the number of women artisans supported by Kouboo’s GSP imports into the United States.

In the first clip, Patrice explains how higher tariffs from GSP expiration, along with global shipping delays and the pandemic, combine to create the “perfect storm” for his business. While Kouboo converted one part-time worker into a full-time worker on January 1 (it’s first non-family member), the impact of higher tariffs plus higher shipping costs forced Kouboo to put plans for another full-time hire on hold.

In the second clip, Patrice provides information on how their products are manufactured, and how GSP/their products provide employment opportunities, especially to rural women. Since men’s agricultural income typically isn’t enough, the women’s income reduces pressure for children to work – improving access to education – as well as pressure to leave the rural areas for urban ones in search of jobs. The unique nature of the products, and limited alternative employment options in the villages, means lost GSP hurts many without even the possibility that someone else could gain.

Kouboo is a great example of how lost GSP hurts companies and workers in both the United States and developing countries. If you’re like Kouboo and harmed by GSP expiration, please add your name to our free GSP supporter list.

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.

Companies in California continued to lead the way with $36 million in tax savings, followed by companies in New Jersey with $20 million. Texas replaced New York in third place and Florida leapfrogged over Georgia for fifth place among all states in terms of tax savings from GSP so far in 2016. This map will be updated monthly as new trade data become available and the most up-to-date version will be available at all times on our Graphics page.

These pages highlight some of the individual states, products, and countries with the biggest increases in January, February, March , and April.