European businesses exporting to the US could face significant additional bureaucratic headaches if Donald Trump follows through on his threat to impose tariffs on eight different European countries, trade analysts have warned.
The US President has threatened to impose additional tariffs of up to 25 per cent on eight countries – Denmark, Sweden, France, Germany, the Netherlands, Finland, Norway and the UK – on June 1 after sending a delegation to a military exercise in Greenland. Trump wants America to own this strategically important island.
Experts said there was no technical reason why the US could not impose tariffs on exporters from individual countries, even though six of them were members of the EU bloc, which collectively negotiates trade agreements.
Sam Lowe, head of trade at consultancy Flint Global, said there were already precedents for US tariffs specifically targeting individual member countries, such as those linked to the long-running Boeing-Airbus subsidy dispute.
That dispute, which lasted for 17 years until 2021, saw EU states with a stake in Airbus production, including France, Spain, the UK and Germany, hit by levies on particular products such as cheese, whiskey or clementine oranges that were vital to their economies.
“It would be difficult, but not impossible, to impose blanket tariffs on a subset of member states,” he said. “There are also other ways to isolate some states more than others by targeting products produced primarily in one or two member states.”
William Benn, head of trade policy at the British Chambers of Commerce, said that since the US focused on an item’s “country of origin” when determining whether to impose tariffs, it would help the US isolate individual EU states or Norway and the UK.
Recent US-EU trade disputes have led to retaliatory tariffs being imposed on products from specific countries, such as the 44 percent US levy imposed on Spanish olives in 2018. Reason 60 percent decline in exports to America.
However, according to Eli Ranson, a former UK trade department official at consultancy SEC Newgate, imposing additional tariffs on a subset of EU countries would take the EU-US trade conflict a step further.
He said, “An actively unilateral approach to differentiate between European countries on tariffs is technically within the US’s gift, but it is absolutely crippling to the bears.” This would be overly complex and create potential management headaches for both European producers and US importers.
Last year, the EU accepted a 15 percent tariff on most of its exports to the U.S. as part of its “reciprocal” tariff agreement agreed with Trump, which included additional tariffs on some products like steel and aluminum that amount to 50 percent.
Trump’s latest threat could, theoretically, impose an additional 10 percent tariff on seven European countries on top of those tariffs, as well as the U.K.’s 10 percent rate, though no details of how the tariffs would operate have been published by U.S. officials.
Trade experts said the integrated nature of EU supply chains, with parts crossing borders from factories in multiple countries, will make it complicated to determine which country a product originated from – a key factor in assessing how much of a tariff an importer will have to pay.
Lowe said that, although it would be extremely complex, the US could eventually impose tariffs, warning that the burden of complying with such rules would fall on companies.
“Most companies don’t try to break the law. As a result, the liability falls on the company and the US importer – the message is ‘declare the goods correctly and if we find out you declared the wrong origin we will fine you’,” he said.
Assuming tariffs are imposed on individual countries, the EU can be expected to retaliate collectively against US measures, according to Michael Gasiorek, director of the Center for Inclusive Trade Policy at the University of Sussex.
Gasiorek said, “We may be coming to a point where countries really need a response to Trump and have to coordinate. Trump has crossed a line by going ahead of some bilateral market-access (trade) negotiations to try and force NATO countries to isolate. I can’t see them agreeing to that.”
However, he said exporters from individual countries would still be hit, depending on their major exports to the US. In the UK case they are pharmaceuticals, chemicals, advanced manufacturing, auto and aerospace.
Britain has agreed to a 10 percent “reciprocating” tariff on most goods to the U.S. as part of its deal with Trump last year, as well as a zero-tariff quota of 100,000 cars and a separate 25 percent tariff on steel and aluminum products.
Benn said Trump’s additional Greenland tariffs would have a “real impact” on UK PLC if European diplomats cannot find a way to defuse the situation, and he urged the government to negotiate to remove the threat.
“The value of (UK) goods exported to the US annually is £60 billion, meaning a 10 per cent tariff would result in £6 billion of additional business costs, hurting 40,000 UK goods exporters to the US at a time when the cost of doing business is already significant,” he said.
