All too often, people think a product is either “Made in USA” or made somewhere else. Yet American manufacturers use imported components to reduce costs or gain access to materials not available in the United States. Similarly, imports often contain American content previously exported and assembled abroad. As a result, most products are both “Made in USA” and somewhere else, regardless of what the label says.
American manufacturers benefit from imports even more when they use trade programs like the Generalized System of Preferences (GSP), which eliminates tariffs imposed on certain products from about 130 developing countries. In fact, about 65% of GSP imports in 2011 were industrial supplies, raw materials, capital goods, and parts (many of which are not otherwise available), so manufacturers got to keep a large portion of the $700 million in the tariff savings that resulted from GSP last year.
For example, $1 billion in ferroalloys used by steel producers and imported duty free under GSP saved American steel manufacturers about $27 million. Steel producers weren’t the only American manufacturers to benefit: GSP reduced the costs of industrial chemicals by a whopping $64 million; of aluminum sheets, plates, and foils by $24 million; of auto parts by $23 million, and of electric motors, transformers, and parts by $15 million.
The list of savings goes on, but the point is clear: GSP works for American manufacturers by lowering costs for key inputs and allowing them to remain competitive when selling at home and abroad.
This post is part of the Imports Work for America Week initiative, an effort by a number of organizations and individuals in the trade policy community to start talking about the benefits of imports for the U.S. economy. You can see our earlier blog post about the initiative here or visit the Imports Work website here.