The threat of EU counter-tariffs – how businesses importing goods from the US can mitigate their exposure under EU customs law

Until recently, most EU businesses importing products from the US have not had to worry about the intricacies of EU customs law, as EU tariffs (also known as “customs duties”) on most industrial imports have been zero or close to zero. However, the recent dramatic changes in tariff policy in the US have led to the EU proposing significant counter-tariffs on US imports. Customs duties may soon become a significant financial burden for affected businesses. That said, for such businesses, there are still several ways in which the impact of such counter-tariffs could be mitigated under EU customs law. This blog post describes the main ways in which this can be done.

US tariffs and proposed EU counter-tariffs

As discussed in our previous publications, the US has imposed a variety of tariffs on EU products: (i) 25% on imports of steel and aluminum and derivative products (e.g. beer cans), (ii) 25% on imports of automobiles and automobile parts and (iii) “reciprocal” tariffs of 20% (reduced for a 90-day “pause” to 10%) on (almost) all other imports (for further details, see our blog posts: Update to Tariff Landscape under President Trump and Trump’s tariffs: WTO consultations requested by China, Canada and the EU).

The EU has proposed various counter-tariffs in response: 

• With regard to the US steel and aluminum tariffs: 
  • Reintroduction of existing (but suspended) counter-tariffs in response to steel and aluminum tariffs imposed by the first Trump administration (originally introduced via Implementing Regulation 2018/886 of 20 June 2018 and Implementing Regulation 2020/502 of 6 April 2020 (as amended)). These include duties on selected US goods such as peanut butter, cotton t-shirts, specific steel and aluminum products and motorbikes. 
  • New customs duties on an extensive list of additional products including textiles and leather goods as well as agricultural products such as nuts, sugar and beef. 
  • These measures were originally to be introduced in three steps on April 15, 2025, May 16, 2025 and December 1, 2025. However, in light of the US 90-day “pause” on “reciprocal” tariffs, the EU Commission has announced that it will put its counter-tariffs on hold until July 14 (for background details see our blog post: The EU Plans to Respond to the Trump Tariffs: What You Need to Know). 
• With regard to the US tariffs on automobiles and the (now reduced) “reciprocal” tariffs, the EU Commission intends to present a “road map” with certain additional measures in response. Details about the “road map” have not yet been released. 

Mitigating exposure to EU counter-tariffs: options under EU customs law 

Although the 90-day pause of both the US “reciprocal” tariffs and the EU counter-tariffs allows time for negotiation, it is still far from clear that the US and the EU will come to an agreement, and on July 14 the first tranche of the EU’s counter-tariffs may come into effect. In preparation for this eventuality, businesses that import US goods into the EU should therefore take the opportunity to familiarize themselves with EU customs law and review their customs processes to identify possible ways to reduce any financial impacts. We highlight below certain aspects of EU customs law that could be relevant in this regard. 

Release of goods for free circulation

In principle, all goods brought into the customs territory of the EU (non-Union goods) must be placed under a “customs procedure”. The most common and important customs procedure is the release of non-Union goods for free circulation within the EU, which gives non-Union goods the status of Union goods. Goods are released for free circulation when the customs authorities of the Member States accept the relevant customs declaration, an event that triggers an obligation imposed upon the declarant to pay any customs duties that are due on the imported goods. 

Customs duties are imposed on products according to a formal “classification” (by description and numerical code), and by “origin”, which is not necessarily the same as their port of departure. Once these are established, duties are imposed either on a “specific” or “ad valorem” basis, or a mix of both. Specific customs duties (used for some commodities and agricultural products) are calculated as €X per quantity of imports; while ad valorem duties are calculated as a percentage of their value. It is anticipated that any EU counter-tariffs on US products will take the form of ad valorem tariffs.

Each of these three factors – classification, origin and value – should be carefully reviewed in order to ensure that goods are not wrongly subjected to any EU counter-tariffs. First, businesses importing US goods into the EU should review whether the tariff classification of these goods has been determined correctly. Experience shows that tariff classification is often subject to mistakes. In case of doubt, businesses have the opportunity to apply to the Member State customs authorities for a “binding tariff information” (BTI) decision.

In addition, businesses should review the origin of their goods to ensure that they are not improperly considered to have a US origin. Where the production of goods involves more than one country, under the EU’s non-preferential rules of origin, goods are of US origin if their last substantial processing took place in the US. Given the wording of this general rule and subject to certain special provisions there might be room to argue in some cases that the goods do not originate in the US. The EU Commission provides a non-binding list of rules (available here) which can serve as valuable starting point for determining the goods’ non-preferential origin.

The third factor to review is the customs value of the imported goods. In principle, the customs value is calculated on the basis of the transaction value, i.e., the price actually paid or payable for the goods when sold for export to the EU (adjustments may apply, for example, commission fees paid by the buyer that are not included in the purchase price increase the transaction value). In particular, as regards goods that have not to date been subject to customs duties, businesses should check whether the customs value is being determined correctly and/or whether a more favorable customs value can be achieved by making changes to the supply chain. In the case of group companies, an option may, for example, be to reduce the customs value by splitting prices into product and service components. However, potential income tax/transfer pricing consequences following from such measures must also be taken into account.  

Customs warehousing

In addition to releasing goods for free circulation, there are several customs procedures that can relieve imports of customs duties that may otherwise be applicable. One is the customs warehousing procedure, under which non-Union goods can be stored in authorized EU premises without being subject to customs duties. Customs warehouses are used to store non-Union goods which are only in transit in the EU customs territory, but they also offer the opportunity for delaying (potentially indefinitely) the payment of customs duties on non-Union goods intended for sale in the EU (credit function). Given that the EU has signalled its willingness to negotiate with the US, warehousing could be an option for businesses until any (potential) measures in response taken by the EU are lifted.

Temporary admission

The temporary admission procedure provides for a relief from customs duties for non-Union goods that are only used in the customs territory of the EU temporarily and for a specific purpose. Goods that are placed under the temporary admission procedure must be re-exported within a specified period of time (a maximum of 24 months depending on the type of goods). Total relief from customs duties under the temporary admission procedure is available for certain means of transport (e.g., cars, aircraft), professional equipment and goods for exhibitions and trade fairs, among other things. The temporary admission procedure has a narrow scope, but in certain cases it could be helpful for mitigating customs liability under any EU counter-tariffs (e.g. for businesses offering transportation services). 

Inward processing 

Non-Union goods that are imported into the EU’s customs territory for use in the production of EU products can be placed under the “inward processing” procedure (a form of “duty drawback”), which relieves these imports from customs duties provided that the final product is then exported from the EU. The inward processing procedure might be helpful as a mitigation option for businesses that are able to adapt their supply chains to make use of this facility.    

Conclusion

As it remains unknown whether the EU’s announced counter-tariffs will be imposed on July 14, a high degree of uncertainty remains. However, the EU's measures in response to the first Trump administration as well as the list of goods published by the European Commission already provide some insights into the range of goods which could be affected. Businesses importing such goods from the US into the EU should use the period until July 14 to reflect on ways that they can mitigate their exposure to any such counter-tariffs. 

Furthermore, potentially affected businesses need to consider that customs duties can have a significant impact on the commercial parameters of already existing and future contracts. The contractual allocation of risks and financial burdens arising from customs duties should therefore also be checked and carefully taken into account in contractual negotiations (for more information see our blog post: Tariff Crisis: Navigating Contractual Challenges and Remedies for Businesses operating in Germany). 

If you would like to discuss any of the points raised in this blog post in further detail, please contact the authors or your usual Freshfields contact.