U.S. Proposes Section 301 Tariffs on Additional $4 Billion of EU Goods

July 2019

On July 5, 2019, the United States Trade Representative (USTR) published a Federal Register notice announcing that it will consider adding a second list of products to the proposed Section 301 tariffs of up to 100 percent on certain goods imported from the European Union (EU).  This second list adds 89 tariff subheadings to the initial list published on April 12, 2019, affecting products with an approximate trade value of $21 billion.  These tariffs are related to the ongoing World Trade Organization (WTO) dispute between the U.S. and the EU over EU subsidies on large civil aircraft. The notice can be read here.
 
The dispute concerns subsidies that the EU and certain EU member states provide to aircraft manufacturer Airbus, which the U.S. has challenged in WTO arbitration proceedings since 2004. In 2011, the WTO issued a report determining that the subsidies violated the WTO member obligations of the EU and the relevant EU member states. The report also provided recommendations for mitigating the adverse effects of the subsidies.  While the EU claims it has adopted the report’s recommendations, the WTO concluded in May 2018 that the subsidies continue to harm U.S. interests.  Currently, the WTO is in the process of determining the level of countermeasures the U.S. may take against the EU and its member states.  The USTR drafted the proposed tariff list in anticipation of the WTO’s countermeasure determination.
 
The USTR published the proposed second list following a public hearing held on May 15-16, 2019 and the receipt of over 600 comments on the initial list.  According to the notice, the proposed second list responds to comments requesting that the USTR consider additional products not previously included.  At this time, the USTR is requesting comments on the proposed second list with regard to:
 
  • The specific products in the list to be subject to increased duties.
  • The level of increase in the rate of duty.
  • The potentially adverse risks or effects on U.S. stakeholders as a result of the increased duty.
     
Interested parties are invited to participate in a public comment and hearing process according to the following schedule:
 
  • July 24, 2019: submission of requests to appear at the public hearing and summary of testimony
  • August 5, 2019: submission of written comments
  • August 5, 2019: public hearing
  • August 12, 2019: submission of post-hearing rebuttal comments
 
The USTR will publish a final list (potentially containing tariff subheadings from both lists) if it decides to move forward with the proposed action. While the notice does not indicate when the USTR will decide on the action and which products it will cover, it will likely come after the WTO make its determination on the amount of countermeasures the U.S. may impose on the EU.  If implemented, the additional duties would apply to products of any of the EU member states.
 
Importers interested in evaluating the duty impact, exploring options for responding to the additional duties, and participating in the comment and hearing proceeding, should contact a BDO Customs and International Trade Services professional:
 
Damon V. Pike
Principal
  James Pai
Senior Manager

 
Yun Gao
Manager
  Jay Cho
Manager