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

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.

For many years, TRI’s GSP savings funded multiple full-time salaries. Despite loss of GSP for products imported from India and Turkey, GSP “still saves our company the equivalent of more than a full-time employee’s annual salary.”

Watch TRI Executive Vice President and CFO Jeff Wright explain how “maintaining full employment, full wages, and employee benefits is our top priority as is supporting our US customers who are trying to do the same for their American workers” – and how GSP renewal would help them do it.

If you’re a GSP importer, submit your own video testimonial here.

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.

Based in Plano, Texas, Custom Direct is a US supplier of luggage, bags and cases with 10 employees. The company works with manufacturers in Cambodia that generally qualify for duty-free treatment under GSP. The company hasn’t paid any extra import tariffs due to GSP expiration, but the costs are quite real. According to Custom Direct’s CEO [emphasis added]:

We lost our largest project of the year, the opportunity to supply 2.5 million eyeglass cases to a major US customer as part of a Q-1 project. We were the successful bidder and awaiting the purchase order when we became aware that Congress had failed to renew GSP.  

The duty on cases would have added 17.6% to our cost of goods which we could not simply “hope” to recoup some day if GSP were to be re-instated. We had no choice but to withdraw and the business went to a supplier in China instead. We are still in the running for Q-3, but without GSP allowing us to partner with a Cambodian manufacturer, the project will go to China again.

The loss of business made us delay plans to hire 6 people in Texas and adjust revenue forecasts downward. Our US warehouse subcontractor also delayed plans to hire additional American workers to handle marking and labeling, packing, and distribution of the eyeglass cases. We are a small business and the loss of such a large client is perilous to our bottom line.

Custom Direct is a textbook example of why even retroactive renewals that refund tariffs paid can’t “make companies whole.” There are no tariff refunds for sales that were never made – something we highlighted on Tuesday as well. The longer Congress allows GSP to remain expired, the greater the risk of major losses for companies like Custom Direct that must compete against suppliers in countries like China that are not impacted by GSP expiration.

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.

• Employ anywhere from 1 to 30,000 US employees. Small businesses dominate, with about 2/3 of companies reporting 12 or fewer workers.
• Saved anywhere from $5,000 to $3 million because of GSP in 2017, and bigger company ≠ bigger savings. The top “saver” was an SME; while 3 of the top 6  were among those with 12 or fewer workers.
• Are headquartered in 17 states and 39 different congressional districts. New supporters come from Massachusetts and Florida and Southern California and Washington State – and everywhere in between.

Here are some of the companies that granted permission to share the details of their GSP use:

• Lawrence & Co. in New Bedford, Massachusetts has 3 employees. GSP saved it $6,000 in 2017 on imports of mica products and leather goods from India.
• RV Industries in Buford, Georgia has 30 employees and saved $200,000 in 2017 on imports of coconut products from Thailand and the Philippines. RV Industries also exports to both Canada and Mexico.
• Miami Chemical in Miami, Florida is among the small business with big GSP savings. GSP saved the 12-person company about $1 million on imports of chemicals from India, Thailand, and Turkey.
• Pioneer Square Brands‘ 110 employees makes it among the larger new supporter list companies. The Seattle, Washington-based company saved $250,000 on imports of educational accessories from Cambodia.
• Colorado Angler Supply in Aurora, Colorado has 6 employees and saved $5,000 in 2017 on imports of fishing tools and accessories from India. It also exports to Canada and South America.

It’s not just new companies: the International Bottled Water Association and the Society of American Florists both joined the supporter list this month as well.

In short, GSP supporters are as diverse as the products they import. It might be hard to find something that ties these 7 organizations together beyond their support for GSP renewal, which may help explain bipartisan support in Congress too.

But it’s hard to pass any legislation these days, so we’re always looking for new examples of how GSP benefits companies and workers throughout the United States. If your organization benefits from GSP and is not yet on the free supporter list, please take a moment to add it here. We also have an open-ended survey where companies can share specific impacts of GSP expiration here.

We are a small, family-owned business that has been manufacturing, importing, and distributing poly bags since 1876 (142 years). Sandbags from India are a major part of our business – the majority of which end up being sold through our distributors to government municipalities for flood relief.

This year, we are worried that we have no choice but to raise our prices to factor in the increased duty, as the unrest in Washington seems to be at an all-time high, and our confidence in a retroactive renewal is not as strong as it has been in previous years.

While we continue to navigate this situation, we have put several expansion plans for 2018 on-hold, including hiring additional sales and operations staff for our Cranbury, NJ facility.

Higher costs and uncertainty about renewal make any big decisions difficult, particularly for small businesses like Halsted. Decision-making becomes harder every day as new shipments arrive and the amount of taxes paid grows, making it critical for Congress to pass GSP renewal legislation quickly.

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.

• Kona Bicycle in Ferndale, Washington: GSP expiration cost Kona $580,000 and delayed new product developments. GSP renewal allowed Kona to invest in new R&D equipment and hire 5 workers in products development and sales.
• Golden Country in Chicago, Illinois: After paying over $1 million in extra import taxes during GSP expiration, renewal allowed Golden Country to give employees raises and purchase new warehouse equipment and trucks.
• Fab-Line Machinery in Nashville, Tennessee: GSP expiration cost Fab-Line $350,000 in extra taxes and forced the small business to lay off a worker. GSP renewal allowed Fab-Line to hire 2 new workers and lower costs for its customers: American manufacturers.

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.

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).