GSP Coalition Publishes Survey of Importers That Will Be Hurt by End of GSP for India, Turkey
Companies that save thousands or even hundreds of thousands on tariffs by sourcing under the Generalized System of Preferences program will likely shift sourcing to China, or cut back on hours or workers, a new survey from a pro-GSP coalition found. The group, which published its report May 1, talked to about 125 businesses that use GSP -- to import from India and Turkey, but also those that import from Thailand and Indonesia. Those countries are currently under review. The terminations for India and Turkey could take effect as soon as May 4.
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About one-third of the respondents that use GSP to import from one or more of those four countries said that if or when the country they currently import from exits GSP, they will buy more from China. "Many companies simply would import less, limiting growth potential," the report said.
One example of a company that would buy more from China is Tyoga Container, which buys boxes and bags for bulk shipments. The company is headquartered in Pennsylvania and runs a warehouse in Houston, and between the two sites, it has about 125 workers. Tyoga saved about $400,000 in tariffs in 2018 by buying GSP-eligible dunnage air bags and poly-woven metal wrap fabric from India and Turkey. Without the tariff break, its imports would be as expensive as or more expensive than Chinese bags.
An example of a company that could not switch sourcing, but that says higher costs could dampen sales, is dZi Handmade, of Easthampton, Massachusetts. It's a fair trade company that imports Indian, Tibetan and Nepalese jewelry, brass bells and bowls, and decorative items. The company employs 10 and just added two workers who start this month because its sales increased 30 percent from 2017 to 2018. It saved tens of thousands in tariffs because of GSP, with an almost quarter of the benefits for India, the report said.
Warehouse Associates in Indiana told the Coalition for GSP in the survey that the tariff's cost advantage on Indian auto part imports allows the company to do assembly in the U.S., which meant it doubled its workforce from 20 to 40 workers. Managing Director Tom Snyder said, "Many people assume imports replace American jobs. For us, the GSP tariff savings on components from India are what made American manufacturing possible in the first place.” Without GSP, the company will import finished products from India, which means it won't need the two engineers it hired to work with clients on designs, as well as cutting assembly workers.