How Tariffs are Changing U.S./EU Trade

How Tariffs are Changing U.S./EU Trade

The trade of goods and services between the United States (U.S.) and European Union (EU) approached $1.3 trillion USD in 2018, but relations have become increasingly strained under the weight of recent tariffs.

U.S./EU Trade History

According to the European Commission, the U.S. and EU have the largest bilateral trading relationship in the world, and in 2007, the creation of the Transatlantic Economic Council brought the two economies even closer together. In 2013, the two powers began negotiations on the Transatlantic Trade and Investment Partnership (TTIP) to boost trade and remove economic barriers. The talks concluded in 2016 without a free trade agreement, but despite this, the U.S. and EU maintained a lower than average tariff rate of less than 3 percent. However, that number is likely to rise as both sides consider implementing new charges on billions of dollars worth of goods.

Recent U.S. & EU Trade Tariffs

U.S. President Donald Trump imposed 25 percent tariffs on steel imports and 10 percent tariffs on aluminum imports, including goods from long-time allies such as the EU. The EU retaliated by levying duties on up to $7 billion USD worth of U.S. exports, including:

  • Steel products (e.g. bars and rods).
  • Clothing and textiles (e.g. jeans and bed linens).
  • Eye makeup and lipstick.
  • Motorbikes and mopeds.
  • Some food products (e.g. corn, rice, cranberries and orange juice).
  • Bourbon, whiskey, cigarettes and several other tobacco products.

An ongoing trade dispute involving aircraft manufacturing giants Boeing and Airbus became the catalyst for more tariffs in 2019. Citing a World Trade Organization (WTO) ruling that found EU subsidies to Airbus were inconsistent with established trade guidelines, the U.S. proposed tariffs on over $11 billion USD worth of EU exports into the country. A key target of the tariffs was civilian aircraft products, but agricultural goods, kitchenware, cashmere sweaters, handbags and other products were also included.

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The EU has formally disputed U.S. subsidies to Boeing, which the WTO acknowledged in a 2019 ruling. Citing the protection of the European aircraft manufacturing industry, the EU proposed tariffs on $20 billion USD worth of U.S. goods, including:

  • Aircrafts.
  • Frozen fish.
  • Citrus fruits.
  • Ketchup.
  • And other goods.

In 2018, aircrafts were the top U.S. export to the EU, totaling over $46.5 billion USD, according to the Office of the United States Trade Representative.

Both sets of tariffs are consistent with WTO rules regarding trade and have yet to come into effect.

U.S Tariffs on EU Automotives

The prospect of tariffs on EU automotive exports to the U.S. will likely remain until an agreement is reached on the trade of industrial goods. President Trump recently extended the May deadline for trade talks to November 2019 to allow time for negotiations, but the president has repeatedly signaled a willingness to impose tariffs of up to 25 percent on auto exports from the EU. The current tariff rate on European vehicles is 2.5 percent.

The European Commission has said that negotiations will only continue if the U.S. does not impose new levies. However, tariff increases have featured prominently in other American negotiations, most recently in a deal on immigration with Mexico and ongoing negotiations with China. In response, the EU stated it is readying counter-tariffs if its vehicles become the subject of a rate increase.

Managing Tariff Changes

The trade compliance landscape is constantly evolving and companies are heavily impacted by policy changes  made by governments. Businesses that leverage an effective supply chain data management solution will be well-positioned to anticipate and adapt to regulatory changes.

To learn how the Assent Compliance Platform can streamline your supply chain data management program, contact us at