From January-July 2021, American companies paid at least $565 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.

July was the most expensive month of GSP expiration yet for 12 states: Georgia, Hawaii, Iowa, Kansas, New Hampshire, Rhode Island, South Carolina, Utah, Vermont, Virginia, Washington, and Wisconsin. In Rhode Island, tariffs costs in July were more than the previously three months combined. Tantalum metals used primarily to manufacture electronic components from Kazakhstan and Christmas lights from Cambodia – the two products driving the Rhode Island increase – show the diverse impacts of GSP expiration.

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.

March was the most expensive month yet of GSP expiration: the $88 million in extra tariffs paid far exceeded the $65-$70 million paid in January and February. In the first three months of expiration, American companies paid at least $225 million in extra taxes as a result of GSP expiration.

Companies in 28 states paid at least $1 million in tariffs in the first quarter of 2021 due to GSP expiration. The map below shows estimated tariffs for products claiming GSP paid by state.

In Oregon, the March tariff costs exceeded January and February combined. It wasn’t just one product. March was the most expensive month yet for Oregon GSP importers of optical equipment and coconut flour from the Philippines, sweeteners and plywood from Indonesia, rubber gloves from Thailand, and wooden doors from Brazil. And it wasn’t just Oregon: companies in Delaware, South Dakota, Vermont, and Wyoming all paid more in March than in January and February combined.

As is so often the case, GSP expiration contributes to larger national issues such as surging lumber costs (WSJ: Lumber Prices Break New Records, Adding Heat to Home Prices, CNN: New homes cost $36,000 more because of an epic shortage of lumber). In the first quarter, the GSP tariff impact on plywood and veneers grew 118% from $4.8 million in 2020 to $10.5 million in 2021. (In 2020, these were savings, but in 2021 they must be paid due to expiration.) The tariff impact nearly tripled compared to 2019. Plywood and veneers ranked 6th in terms of GSP tariff impacts so far in 2021, up from 25th in 2019. It’s not just plywood and flooring-related products: GSP imports of wooden doors are up 40% in 2021 and builders joinery are up 96%.

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.

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

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.

Vermont companies imported an estimated $29.2 million under GSP in 2011, saving them on average 3.8%. Russia was the most important source of GSP imports, accounting for about 53 percent of the tariff savings. Tires were Vermont’s top import under GSP in 2011 and would have faced average tariffs of 4% without GSP.

Yet GSP is set to expire on July 31, 2013, and companies could face tariffs higher tariffs starting on August 1 if Congress does not pass legislation renewing GSP. When GSP expired at the end of 2010, American companies paid nearly $2 million per day, every day, until Congress finally acted 11 months later!

This graphic shows just some of the negative impacts from the last GSP expiration. It also helps explain why more than 335 companies and associations joined the 2011 GSP Supporter List urging renewal of the program when it last expired.

Are you a Vermont company that would be hurt by GSP expiration? If so, please take 30 seconds to let Congress know by adding your name to our free 2013 GSP Supporter List right now.