If you ask people what September means to them, you’ll get lots of different answers: the end of summer, back to school, start of college/NFL football, cooler weather, or perhaps baseball pennant races (unless they’re in DC). Companies that use the GSP program might also mention the return of Congress from a looooong state work period and the hope for legislation to end recently imposed import taxes.
Just as the arrival of September means something different for each person, the way GSP expiration impacts specific companies can also vary greatly. Past research has shown that the overall cost to American companies is about $2 million per day. We won’t know the actual value for the first month of expiration until the August trade data are released in a month or so, but we can look at responses from our August recess survey to some of the company-specific impacts.
For some, expiration was felt immediately. Vortex Optics in Middleton, Wisconsin paid $150,000 in new taxes while Congress was out of DC in August, and expects to pay another $100,000 this month if GSP remains expired. Those taxes are “putting a severe financial strain” on the 100+ employee business according to Vortex Optics President Daniel Hamilton.
For others like Far East American, a Los Angeles-based importer of tropical plywood, GSP expiration hasn’t hurt…yet. Far East American didn’t import any (previously) GSP-eligible shipments in August, but the company expects to pay more than $250,000 in tariffs in September because of GSP expiration.
Finally, there are others for which GSP expiration means no imports at all. One company in Florida (that wishes to remain anonymous) must bid in the next two weeks on business for 2014. Without GSP in place for imports from Indonesia, it cannot match prices of similar goods from China and Vietnam. As a result, GSP expiration likely will cause the two-person company to lose out on a $2 million contract – a huge deal for a very small company!
These are just a handful of the survey responses, and we’ll post more in the coming days and weeks. If you’re a GSP importer, please fill out this survey so we know how expiration is impacting your company (as you can see above, there’s an option to remain anonymous).