European Union Threatens Tariffs on Select U.S. Exports in Retaliation Against Section 232 Steel and Aluminum Tariffs
The European Commission has announced that it will retaliate with tariffs on imports of select U.S. products if President Trump follows through with his previously announced decision to place a global tariff of 25 percent on steel imports.
On March 6, 2018, the European Commission released a list of items exported from the United States that will be subject to these trade remedies, accounting for $3.5 billion in U.S. exports. While some of these products include many of the same types of steel products subject to the Section 232 steel tariffs, roughly $2.5 billion worth of the products included in the list were added to exert political pressure on Congressional leadership, including agricultural products and various apparel and luxury goods with strong ties to the home districts of some Congressional leaders. The list only covers products that will be subject to retaliation for U.S. steel tariffs under Section 232; a list of products subject to retaliation for aluminum tariffs has not been announced or released at this time.
While the Trump administration considers the Section 232 remedies to be a national security-related trade remedy under U.S. law, the European Commission is treating the Section 232 program as a “safeguard” action. Under World Trade Organization (WTO) rules, the European Union can retaliate against safeguard actions through “rebalancing” measures. It remains to be seen if the WTO will allow this type of retaliatory action by the European Union. If approved, such an action could proceed in 90 days. The European Commission is also preparing safeguard measures of its own to prevent steel imports from third countries diverted by the Section 232 tariffs from flooding the European market.
The new EU tariff rate for items covered in the list will be 25 percent ad valorem.
Scope of Remedies
The European Commission’s list contains 186 items, with EU Combined Nomenclature (CN) 2018 subheadings, product descriptions, and 2017 import values listed for each product. The European Union’s CN nomenclature is equivalent to the HTSUS nomenclature up to the 6-digit level.
For iron and steel products, the remedies will affect 103 products worth roughly $1.1 billion, including certain iron, steel, and steel alloy materials, as well as certain finished goods including appliances, chains, containers, fencing, scaffolding, and structural components under subheadings 7210, 7222, 7223, 7226, 7228, 7229, 7301, 7304, 7306, 7307, 7308, 7309, 7310, 7311, 7314, 7315, 7318, 7321, 7322, 7323, 7324, 7325, and 7326.
For apparel, textile and footwear products, the remedies will affect 10 products worth $109.7 million, including certain shirts, trousers, shorts, footwear, and bed linens under subheadings 6109, 6202, 6203, and 6204. For selected industrial goods, the remedies will affect 14 products worth $1.2 billion, including certain cosmetics, motorcycles, and various categories of boats under subheadings 3304, 8711, and 8903.
For unprocessed agricultural products, the remedies will affect 37 products worth $430.7 million, including certain beans, grains, berries, and juices under subheadings 0713, 1005, 1006, 2008, and 2009. For processed agricultural products, the remedies will affect 22 products worth $749.9 million, including certain corn, peanut butter, whiskey, and tobacco products under subheadings 0710, 1904, 2001, 2004, 2005, 2008, 2208, 2402, and 2403.