Trade War Fear

In early March 2018, the United States announced the imposition of tariffs on foreign imports of Steel (25%) and aluminium (10%). The European Union, along with Canada and Mexico, were at that time granted temporary exemptions.  These exemptions were lifted on May 31 2018, when the USA announced its intention to set new duties on Steel and Aluminium imported from the EU.  These additional tariffs are now in place.

EU Response

The EU took the case to the World Trade Organisation (WTO) on the 1st of June 2018 and announced the increase in duty of 10%, 25%, 35% and 50% on the certain products (summarized in Annexes I and II of Regulation (EU) 2018/724)) originating in the United States.

Following this, duties were applied on products listed in Annex I on June 21st 2018. Additional duties (on the products in Annex II) will be imposed on the earlier date of June 1st 2021 or the 5th day following the date of the adoption by the WTO Dispute Settlement Body of a ruling that the United States’ safeguard measures are inconsistent with the relevant provisions of the WTO Agreement.

The practical effects are demonstrated as follows on some of the product coming from the US into the EU:

Surveillance System

A surveillance system was put in place in 2016 (Regulation (EU) 2016/670 on iron and Steel) and demonstrated that imports of certain steel products have been increasing.

With the US imposing restriction on steel products, the risk is an increase of import of steel products coming from other Third Countries. The surveillance programme has recently been extended to aluminium products (Regulations (EU) 2018/640).

Under the surveillance system, products concerned shall be put into free circulation in the Union only on production of a surveillance document issued by the competent authority designated by a Member State.

China

The US announced the imposition of additional tariffs on 818 items coming from China on July 6th. Retaliation from China will be on additional tariffs on over 545 US goods including sectors such as agriculture and automotive.

This discussion had been ongoing since January with back and forth submissions of further lists of products subject to additional duties between China and the USA.

The main focus seemed to be on steel, aluminium waste (making US measures on aluminium less effective as the aluminium waste would be stuck in the US) and on Pork  (then wine, fruits, steel pipe and tube; ginseng, soybean and cars…).

The US sanctions are putting on hold further trade negotiations between the two countries.

EU Impacts

Levies on European cars and Irish Alcohol are two sectors of potential concern and would have a major impact for German car manufacturer and Irish spirit producers. On the other hand, if tariffs on pork from US into China are imposed, then EU (Irish) pork producers could benefit and export to China.

For further information on how the sanctions might impact your business or to arrange a meeting please contact Carol Lynch on [email protected] or any member of the Customs and Trade Team at your local BDO office.

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