EU Faces Higher Tariffs Under New US Surcharge Policy

Surcharge Replaces Tariff Agreement

The European Union is addressing a new United States trade policy after the U.S. Supreme Court invalidated a previous tariff structure. In response, the Trump administration introduced a 10% "import surcharge" on EU goods, which applies in addition to existing Most-Favoured Nation, or MFN, duty rates.

This new measure replaces the 'Turnberry Deal', which had established a broad 15% tariff on most EU exports.

Overview of the New Tariff Structure

Unlike the previous flat tariff, the new system combines the 10% surcharge with pre-existing MFN rates. While the average U.S. MFN duty is 3.4%, meaning many industrial goods may face lower overall tariffs, products with higher MFN rates are now more costly to import.

The U.S. administration is reportedly working to increase the surcharge to 15%, which would further elevate costs for EU exporters.

Impact on European Goods

The European Commission notes that 7% of EU exports to the U.S. are subject to an MFN duty above 5%. Key sectors facing higher effective tariffs include textiles, clothing, and footwear, with rates on some shoes reaching as high as 48%.

Agricultural products such as certain dairy items, fruits, and vegetables also face increased import costs under the new surcharge system.

Summary

The EU acknowledges a transitional period where certain exports will face higher U.S. tariffs, creating uncertainty in the trade relationship. The primary factor to monitor is the potential increase of the surcharge to 15%, which would significantly impact a wider range of European products.

FAQ

Q: What is the new US import surcharge?
A: It is a 10% rate applied on top of existing MFN tariffs for EU goods, replacing a former 15% flat tariff deal.

Q: Which EU products are most affected?
A: Products with high existing MFN rates are most impacted, including textiles, footwear, and certain agricultural goods like cheese and vegetables.

Source: Investing.com