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Trade Policy

What is GSP?

Generalized System of Preferences — a program providing duty-free treatment on imports from qualifying developing countries. In the context of U.S. customs and tariff recovery, understanding gsp is essential for navigating the CAPE refund process and ensuring accurate duty assessment.

Definition

The Generalized System of Preferences (GSP) is a U.S. trade program that provides duty-free treatment on certain products imported from eligible developing countries and territories. Established under the Trade Act of 1974, GSP covers approximately 3,500 products from over 100 beneficiary countries. Eligibility depends on the product's HTS code, country of origin, and whether it meets the 35% value-added rule of origin. GSP has experienced periodic lapses and renewals by Congress — check current status before relying on GSP eligibility for duty planning.

How GSP Relates to Tariff Refunds

GSP duty-free treatment is separate from IEEPA and Section 301 tariff programs. A product eligible for GSP from a qualifying country would not owe the base MFN tariff, but may still be subject to Section 301 tariffs if the country is covered. Understanding the interaction between GSP and Section 301 is important for accurate refund calculations.

Example

An importer brings in handmade baskets from Thailand (a GSP-eligible country). The base MFN duty is 6%, but GSP provides duty-free entry. However, if Section 301 tariffs apply, the 25% surcharge is assessed on top of the GSP-reduced (0%) base rate.

Frequently Asked Questions

Is GSP currently active?
GSP has experienced periodic lapses. Check the USTR website or your customs broker for current program status before relying on GSP eligibility.
Does GSP eliminate Section 301 tariffs?
No. GSP only waives the base MFN duty rate. Section 301 tariffs are assessed separately and are not affected by GSP status.

Related Terms

Most Favored NationThe normal (NTR) tariff rate applied to imports from WTO member countries, also called Normal Trade Relations.NTRNormal Trade Relations — the baseline tariff rate the U.S. applies to imports from most WTO member countries.DutyA tax imposed by the government on imported goods, based on the HTS classification and country of origin.HTS CodeHarmonized Tariff Schedule code — the 10-digit number that determines the duty rate on imported goods in the U.S.USMCAUnited States-Mexico-Canada Agreement — the trade agreement that replaced NAFTA in 2020, governing North American trade.

Legal References

  • 19 U.S.C. §§ 2461-2467 — GSP Program
  • Trade Act of 1974 Title V

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