How GSP Termination Would Hurt American Businesses & Workers

The Coalition for GSP today released an in-depth survey of American businesses that details how they will be harmed by loss of duty-free imports under the Generalized System of Preferences (GSP) program. On March 4, The Trump administration announced its intent to terminate eligibility for India and Turkey under the GSP program and a formal proclamation terminating eligibility could come by the end of the week. As the report on the survey – How GSP Termination would Hurt American Businesses & Workers – shows if termination is implemented it would increase tariffs that American businesses pay on imports from India and Turkey by hundreds of millions of dollars annually.

“Too often GSP is seen as a benefit for foreign countries. The real beneficiaries of GSP are American businesses and workers who save hundreds of million in tariffs every year,” said Dan Anthony of the Coalition of GSP. “We surveyed the American businesses who actually use GSP and found that termination of benefits would cost American jobs, hamstring future growth, disrupt supply chains and benefit China more than American businesses.”

Today’s report is based off of recent survey responses from 124 companies that import under GSP. Key finding include that:

• GSP loss would cost American jobs. About 90% of survey respondents expect sales to fall if GSP is terminated, making it difficult to move ahead with current planned expansions. As a result, about 40% expect to lay off currents workers, and even more expect planned hires and investments to be put on hold.

• GSP termination would disrupt supply chains, with China the most likely beneficiary. About one-third of respondents expect to source more from China if GSP benefits are terminated – about the same percentage that expected to shift to any of the approximately 120 GSP countries and significantly more than “other” countries (NAFTA, EU, Japan) combined.

• GSP importers are thriving. About 70% of survey respondents have hired new workers or increased wages and benefits in the past year.

• GSP importers are poised for future growth. Most survey respondents expect further growth in the coming year, including 60%-70% of respondent that expect to hire more workers, increase pay and benefits, and make capital investments.

• Companies with increasing GSP imports create more jobs. Despite the frequent narrative that imports destroy jobs, companies with rising imports outperformed companies whose imports were flat or declined in every “desirable” category, including new hires, increasing compensation, making investment, increasing domestic production, and even growing exports.

More on the report: The report is based on survey responses from 124 companies that import under the GSP program. Companies answered a series of questions, including demographic info (locations, employees), import info (products, GSP source countries, GSP savings), recent and planned actions with GSP in place (hires, wage increases, output/export increases, capital expenditures), and expected impacts of lost GSP on sourcing and domestic operations. Aggregated data reflect all survey responses. Profiles include only those that gave explicit permission to publish company-specific info. 

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