The Office of the US Trade Representative, part of the Executive Office of the President, announced last week that it is proposing a new set of “additional duty” tariffs targeting specified products of European Union countries. The rationale is that the EU, and especially those of its member nations most actively involved in the Airbus aircraft manufacturing program, have unfairly subsidized Airbus – to the detriment of US aircraft manufacturers and their suppliers.
The US has asserted that many billions of dollars in EU subsidies, over several decades, have cost US companies enormous numbers of lost opportunities to sell US-made aircraft worldwide, at huge costs to the US economy. In response, the US is targeting:
new, non-military aircraft and parts manufactured in France, Germany, Spain, and the United Kingdom; and
a broad range of cheeses and other food products, wines, fabrics, ceramics, tools, and other items from all 28 of the EU member countries.
The complete preliminary list is available on the US Trade Representative’s website, and includes 317 tariff subheadings and nine additional Harmonized Tariff system statistical reporting numbers. This document also includes a brief summary of the history of the US – EU trade disputes over Airbus aircraft subsidies.
The proposed “additional duty” tariffs on these EU products are open for public comment through the www.regulations.gov website, under the docket number USTR-2019-0003. Only electronic submissions will be accepted. These comments, except for information specifically identified by the submitter as “business confidential”, will be posted in the electronic docket record and available for public inspection.
Also, a public hearing is scheduled for May 15 in Washington, DC. Requests to appear at the hearing must be submitted by May 6, and must include a summary (or the full script) of the testimony to be presented.
After reviewing electronic comments received, and the results of the public hearing, the US Trade Representative’s office will consider possible changes to the preliminary list of affected EU products, including:
additional duty” rates to be applied to each type of goods covered by the new tariff provisions
additions or subtractions to the list
“carve-outs” excluding specific items within a tariff classification from the new “additional duty” rates applicable to other items with that classification
The preliminary list suggests that the “additional duty” rates under consideration for targeted EU products may be up to 100 percent of the value of the goods. (Similarly high “additional duty” tariff rates have been charged by the US against specific EU products during previous trade disputes in the early 2000s.)
At this time, there is no specifically announced schedule for further actions on this topic. Depending on the nature and volume of public comments, and the political reaction from interested segments of the US public, it seems quite possible that additional rounds of public comment and discussion may be scheduled.
To the extent that previous sets of “additional duty” tariffs against goods of China origin provide an indication of possible timelines, a “lag time” of two to four months from public hearing to effective date of any new tariffs seems plausible. Also, a large groundswell of public opinion for or against those new tariffs could accelerate or delay any such timeline.
Because previous tariff actions of this sort have often triggered retaliatory tariffs from affected countries, it also seems likely that some US exporters could also be affected, as well as many US importers.
If your business may be affected by the proposed new “additional duty” tariffs on products of European Union member countries, you have an important opportunity to express your opinion, and ideally have an effect on whatever final decisions are made about this important topic during the next several months. If you would like to discuss and identify possible impacts on your business, please contact the trade experts at Transmark Customs Brokers. We’re here to help you!