The European Commission (the “Commission”) is actively preparing its response to US tariffs should the ongoing negotiations not reach a successful outcome. The EU response, as announced on 8 May, has three main elements:
- imposing tariffs on US imports into the EU;
- imposing restrictions on certain goods exported from the EU to the US; and
- initiating a formal dispute with the US at the World Trade Organisation (“WTO”).
The Commission has launched a public consultation on the categories of products to be covered by the tariffs and export restrictions. That public consultation is open until 10 June.
Potential EU tariffs
The list of US products which may be the subject of possible EU tariffs runs to 218 pages. It includes a wide range of industrial and agricultural products, for example chemicals and plastic; iron, aluminium and steel products; cars and car parts; machinery; and electrical equipment. From an Irish perspective:
- The inclusion of aircraft and aircraft parts is a significant development for the Irish aircraft industry.
- Businesses operating in the medical device sector in Ireland will likely be concerned about the inclusion of certain medical equipment as it could increase the risk of US retaliation targeting that industry.
- While Ireland’s drinks industry had been successful in removing bourbon from the EU’s initial list of countermeasures issued on 9 April (as they considered it would attract US retaliation), they will disappointed to see it included in the 8 May list along with a wide range of other alcoholic beverages.
Pharmaceuticals and semiconductors are absent from the list.
Potential EU export restrictions
A narrower list of products on which the Commission is considering imposing export restrictions has also been issued for consultation. That list targets metal scrap and derivative products.
While negotiations with the US are ongoing, the Commission intends to finalise the proposed countermeasures so that they are available for implementation in the event negotiations do not reach a satisfactory outcome.
Initiating WTO dispute
The Commission has also announced its intention to initiate a WTO dispute in respect of the ‘reciprocal’ tariffs introduced by the US in early April (initially set at 20% but currently reduced to10% under a 90 day pause). The WTO dispute is initiated by lodging a request for consultation with the WTO. This allows the EU and the US two months to reach a mutually agreed solution. If the consultation fails, the EU can request a panel to assess the case.
Matheson LLP’s dedicated Customs and Trade Law team helps businesses to navigate the potential impact of new US and EU tariffs. If you would like to discuss the impact that any tariffs or other trade restrictions could have for your business, please get in touch with any member of the team (Matthew Broadstock, Dara Higgins and Bernadine Dooley) or your usual Matheson contact.