FIM Brussels – The latest on EU-US trade relations: What impact for motorcycle industry?
On 31st May, the US announced that it would not be exempting the European Union, alongside Canada and Mexico, from tariffs on steel on aluminium for a third time. The action follows the decision on 29th May to impose tariffs on China. The import tariffs on steel aluminium of 25% on steel and 10% on aluminium affecting the EU, Canada and Mexico came into force on 1st June after a breakdown in negotiations between the US and the EU to agree on a permanent deferral of tariffs.
President Trump first signed an Executive Order setting out a plan to introduce tariffs on imports of steel and aluminium at a global level in an attempt to erect economic safeguards on 8th March. Since the initial news, the US have exempted the EU, Canada and Mexico from the tariffs on two previous occasions in advance of the respective deadlines, appearing to utilise the threat of a rise in duties to negotiate a more favourable trade relationship with its main trading partners.
The EU came promptly with a counter-statement on 31st May which confirmed that it will launch proceedings against the action taken by the US in the World Trade Organization through a dispute settlement case and will enforce counter measures as is allowed under WTO rules. According to WTO rules, the EU’s imposition of counter-tariffs can come into force as of 17th June as the EU gave a formal notification to the WTO on 18th May.
On 6th June, the European Commissioner for Trade Cecilia Malmstrom confirmed that the EU would impose additional duties on the full list of US products notified to the WTO on 18th May. As per the provisional retaliatory list published on 16th March, motorcycles and mopeds with internal combustion engines as well as vehicle parts are included and will be charged an additional import tariff of 25%. Additionally, iron, steel, industrial and agricultural goods and products totalling $3.5 billion at a tariff rate of 25% are included.
This action is consistent with the EU’s initial rhetoric on the matter, following European Commission President Jean-Claude Juncker’s warning to the US on 2nd March that Harley-Davidson motorcycles would be included in the scope of retaliatory tariffs. President Trump has also stated that he is considering the possibility of bringing in tariffs on EU cars. The potential of the US including European PTWs within the scope in reaction to the EU’s action remains an active threat.
At present, the EU contends that the US action is illegal under WTO rules and will seek to resolve matters at WTO level. Furthermore, the latest discussions between the EU, the US and Japan took place on 31st May in Paris, France. While a resolution was not found, some consensus has formed amongst the three parties relating to China’s trade practices.