• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • Expiration of Trade Preference Program Means Higher Prices

    Kenichiro Seki/ZUMA Press/Newscom

    Kenichiro Seki/ZUMA Press/Newscom

    On July 31, the Generalized System of Preferences (GSP) expired.

    GSP is a program that waives tariffs on thousands of products that Americans import from developing countries. In 2012, the program reduced tariffs by $742 million. As House Ways and Means chairman Dave Camp (R–MI) observed, “GSP provides important benefits to U.S. manufacturers and consumers and supports more than 80,000 American jobs.”

    As a result of GSP expiring, tariffs will be imposed on products ranging from car parts to jewelry. Increasing taxes on these products means higher prices for the Americans who buy them. For example, when the government imposes a 4 percent tariff on imported jewelry, the jewelry company passes much of that expense on to American consumers in the form of higher prices.

    According to the office of the U.S. Trade Representative:

    An underlying principle of the GSP program is that the creation of trade opportunities for developing countries is an effective way of encouraging broad-based economic development and an important means of sustaining momentum for their economic reform and liberalization. The GSP program also helps to lower the cost of imported goods for U.S. businesses and consumers.

    Putting it another way, by failing to extend GSP, the United States is harming momentum for economic reform and liberalization in developing countries while increasing the cost of imported goods for U.S. businesses and consumers. That’s a lose-lose situation for people in the United States and in developing countries, too.

    Posted in Economics [slideshow_deploy]

    Comments are closed.

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.