Shippers importing into the U.S. have been experiencing fast changes to tariffs and trade policy over the past few months, with new and adjusted tariffs across countries and products. And more change could be coming in April as the U.S. administration announced reciprocal tariffs are under consideration. While no across-the-board tariffs have been formally announced on U.S. imported products from Europe, shippers are looking ahead and eager to understand the potential impact of U.S. tariffs and how they can prepare.
Potential impact on the European economy
European exports to the U.S. are already subject to a 25% tariff on steel and aluminum that went into effect on March 12. Considering that the United States is one of Europe’s largest trade partners, those tariffs are already affecting European businesses.
As a result, the European Union (EU) announced its intent to impose countermeasures to proportionally balance the value of the products subject to tariffs. The new tariffs from the EU are set to take effect in April, but the European Commission emphasizes that it is open to negotiations.
New 25% tariffs on vehicles and automotive parts exported to the United States were announced on March 26, but did not go into effect immediately.
The potential reciprocal tariff on trade between the U.S. and the EU remains undefined. However, since the United States accounts for about 20% of EU’s exports, this could have a significant impact on the entire EU economy.
Which sectors might be most affected?
While there are not official details available on what the reciprocal tariffs could impact, other commodity-specific tariffs the U.S. administration has signaled could fall on lumber, semiconductors and pharmaceuticals.
The potential tariffs could result in higher consumer prices, making these products less competitive in the U.S. market. Countermeasures could also be taken by the EU in response to any reciprocal tariffs, as we saw with the recent steel and aluminum tariffs.
Preparing for the changes
European companies that export goods to the United States need to prepare for these changes by considering various strategies to mitigate the impact of possible tariffs. These include:
Alternative markets
One key strategy could be pursuing opportunities in countries with lower or zero tariffs. This diversification helps reduce the pressure of tariffs on overall business costs, potentially helping maintain your current pricing on your goods and lowering the risk of negative cash flow.
Foreign Trade Zones (FTZ)
These areas where goods can temporarily be stored or handled can be used to defer tariffs on products that will later be exported. This solution can be utilized by manufacturers of high-value goods to spread costs over a longer period. Instead of paying tariffs on all products at once, the shipper can pay the tariff when the product is withdrawn from the foreign trade zone, even several months later.
Entry consolidation
C.H. Robinson’s entry consolidation program includes holistic customs clearance services across various destinations and transportation modes. It allows combining multiple shipments into one customs entry. A single, consolidated entry can reduce a shipper's overall Merchandise Processing Fees and can save a significant amount annually.
Monitor changes and work with experts
Regardless of the chosen strategy or their combination, it is essential to monitor changes in U.S. and Europe customs policy. When the U.S. administration announced tariffs on goods from Canada and Mexico, these were later modified. Consider only official U.S. announcements and consult a logistics company with the expertise and services to mitigate the impact of increased tariffs on your supply chain.
If you need support in transporting goods from the European Union, our expert team is at your disposal.
