Struggles faced by EU industries amidst implementing fresh US regulations on importation of steel and aluminium products.
The European Union (EU) and the US government have been engaged in talks regarding tariff rollover agreements for steel and aluminum, following the US's decision to impose 15% tariffs on most EU imports starting August 7. These discussions, as per the EU Commission, are seen as the least favorable among available options, with no broader agreement reached yet.
The European Automobile Manufacturers' Association (ACEA) has cautioned about a 'substantial' financial impact due to these tariffs. The situation is further complicated by the challenge of identifying the origin of products, leading to administrative burden and associated costs for industries. The complexity increases when a single part falls under multiple tariff categories simultaneously.
The US has implemented 50% tariffs on EU steel and aluminum, and the EU-US trade agreement signed in August imposes 15% tariffs on EU cars entering the US. In June, the US administration expanded the list of tariffed products to include 407 additional categories, such as fire extinguishers, machinery, wind turbines, and construction materials containing or made from aluminum or steel.
This new regime has led to additional costs for EU industries, particularly those in the automobile sector. Many suppliers may lack the necessary information to determine the origin of the materials, exacerbating the situation.
The EU is still seeking to agree on tariff rate quotas with the US administration to ease the burden for EU exports to the US. Determining the exact origin of steel or aluminum under the 'melt and pour' rule is complex and often requires cooperation across multiple tiers of suppliers.
The machine tool sector, represented by CECIMO, the European association of manufacturing technologies, has stated that these tariffs put significant pressure on their industry. The EU failed to secure tariff exemptions for steel and aluminum entering the US within the trade agreement concluded in July.
Many generic materials crucial to car manufacturing are now affected by these tariffs. The US requires importers to provide proof of origin for these materials when they are part of a finished product, adding to the administrative burden and costs.
As negotiations continue, both parties aim to find a solution that minimizes the impact on their industries and maintains a balanced trade relationship.
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