Wednesday, November 25, 2020


Congress can boost the economy and help Americans save billions of dollars — all before the end of 2020. How? Simply by cutting tariffs on thousands of imports through two trade programs that expire Dec. 31.

If lawmakers were to advance a new Miscellaneous Tariff Bill (MTB) and Generalized System of Preferences (GSP), Americans would save more than $1.7 billion per year in passed-through tariff costs.

Both bills would eliminate import taxes on intermediate goods, like mechanical parts or chemicals, which American businesses use during the manufacturing process.

When tariffs on intermediate goods are low or zero, manufacturers are able to lower prices for their final products, at the same time increasing their overall productivity and output. For American families, this means more affordable products, higher wages, better benefits, and more job opportunities. For domestic manufacturers, it means their products are more competitive in the marketplace.

Past MTBs have proved quite beneficial, becoming indispensable for countless businesses.

Glen Raven Inc., a small fabric company based in North Carolina, benefited greatly from the passage of the 2018 MTB. The company was able to file nine petitions when the program was re-upped, amounting to cost-savings of more than $6 million. These savings let the company emerge from a period of halted investments and a prolonged hiring freeze.

The National Association of Manufacturers estimated that the 2018 MTB alone would “eliminate unnecessary import tariffs of more than $1.1 billion over three years with an estimated boost to U.S. manufacturing output of $3.1 billion.”

But despite the proven success of these tariff reductions and a long history of bipartisan support, Congress this year has dragged its feet on renewing them.

Although the United States International Trade Commission released its final report on the program, per the process requirements under the American Manufacturing Competitiveness Act of 2016, Congress has yet to introduce any legislation regarding a future MTB. This is concerning. The last lapse in the program cost Americans over $700 million annually.

But a new MTB is not the only trade preference program vying for Congress’ attention. Like the MTB, the Generalized System of Preferences reduces tariffs on many intermediate goods. However, the GSP is a substantially larger program covering over 5,000 products, and is aimed in part to help developing countries grow their economies and deepen trade relations. In 2018, this amounted to almost $24 billion worth of imports.

There was a glimmer of hope earlier this year when Congress proposed the idea of introducing GSP legislation alongside the reauthorization of the Caribbean Basin Trade Partnership Act. But although lawmakers ultimately renewed the latter act, GSP legislation was left in the dust. Even worse, only a few months later, the Trump administration announced it would suspend an additional $817 million in trade preferences for Thailand under GSP, which is one of the program’s largest beneficiaries.

Hiblow, a small air pump distributor based in Michigan, imports its products from the Philippines under GSP and is a prime example of just how crucial the program is for American businesses. Company President Tim Smith estimates that GSP saves Hiblow $400,000 annually in taxes, which the company uses to hire more workers and provide better benefits for staff. And just this year, this tax savings helped the company mitigate a 500% increase in freight costs due to COVID-19.

These testimonies from Glen Raven Inc. and Hiblow are only two examples of why Congress should not allow another lapse in these programs. American companies and Congressional Representatives alike have been incredibly vocal about renewing this legislation, but to no avail.

Reauthorizing the Generalized System of Preferences and approving a new Miscellaneous Tariff Bill before the end of 2020 is vital for the health of our economy. And now more than ever, it is time for Congress to truly listen to and prioritize policies that help Americans.

Rachael Wolpert is a research assistant in The Heritage Foundation’s Institute for Economic Freedom.

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